Minn. AG accuses debt buyer of chasing wrong folks

Attorney General Lori Swanson is taking steps to sue a debt collection company that she says has filed false and deceptive court documents against Minnesota consumers.

Swanson plans to file a lawsuit against Midland Funding and Midland Credit Management, which are both subsidiaries of Encore Capital, a California-based company. Swanson said the debt buyer and its collection arm are using "robo-signed" affidavits, and in some cases are filing lawsuits against the wrong people.

"This company has a history of targeting people and assuming that they owe the money until the citizen can show they don't owe the money," Swanson said. "It really flips the process on its head, because a debt collector of a debt buyer shouldn't be contacting anyone about a payment of a bill unless they've substantiated that the person actually owes the money."

Swanson said Midland has filed more than 15,000 lawsuits in Minnesota since 2008. In 2009 alone, Midland sued 245,000 lawsuits against individual citizens nationwide, she said.

Midland has faced court action in other states following similar complaints, including a class action lawsuit that was recently settled. As part of the settlement, Midland agreed to drop more than 10,000 claims against consumers in Maryland.

In a written statement, company officials said they take Swanson's allegations seriously and will work with her office to resolve the matter.

"The complaint appears largely to restate concerns raised in a 2008 lawsuit against the company, which was recently settled in principle," the company's statement read. "As a result of that case, Encore modified its affidavit process in 2009 and believes that its current practices are legally sound."

As for filing lawsuits against consumers, the company said it's often the only option -- 95 percent of consumers ignore letters sent by the company, Encore officials said.

Swanson said it isn't yet clear how many of the lawsuits the company has filed against Minnesotans are legitimate and how many are allegedly fraudulent.

Robert Olson, a warehouse worker from Bloomington, contacted Swanson's office after Midland asked him to pay more than $1,400 in credit card debt. Olson said it was debt on a credit card he had never owned.

"I've never bounced a check in my life, [I've] paid every bill in my life, I don't owe no money, and all of a sudden I'm having to prove to them than I'm not a debtor, you know, a deadbeat," he said during a news conference at Swanson's office. "It's time to shut them down."

Swanson said Midland admitted they had the wrong person in that case after her office contacted the company. But she said there may be many other consumers who were wrongly sued. She also said some of the consumers who contacted her office have had trouble getting the company to make corrections to repair their credit scores.