Minnesota Files Lawsuit Against Debt Collection Company For Robo-Signing

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StarTribune.com has posted an article the state of Minnesota’s lawsuit against a debt collection firm. The case is actually the first “enforcement action” case in the country against a debt collector for the use of robo-signing.

Minnesota attorney general Lori Swanson has charged Midland Funding LLC, a debt collection company based in St. Cloud, with “robo-signing” thousands of collection documents and didn’t verify them for accuracy. Robo-signing in such a high volume caused lawsuits to be filed against consumers all across the country. The lawsuits are being categorized as false and deceptive and attempted to scare people into paying off debts that weren’t theirs. Debt buyers like Midland always allege that false debts aren’t their fault because when they purchase the debt from another company, many times all the information they receive is the debtor’s name and the amount owed. There is rarely any additional information to follow up with. Midland has filed more than 15,000 lawsuits in Minnesota against consumers since 2008 which makes it one of Minnesota’s biggest lawsuit filers. In 2009 the company filed 245,000 lawsuits against consumers nationally.

Midland employees have admitted to robo-signing up to 400 affidavits a day and never took the time to verify the accuracy of the debts. The majority of the debts were “zombie debts” (debts that are 10 or more years old) that were purchased for cents on the dollar from credit card companies and other businesses. Midland has declined comment on the case, but says it takes the allegations very seriously.

“This company has a history of targeting people and assuming they owe them money until the citizen can show they don’t owe the money,” said Swanson, appearing at a capitol press conference with five Minnesotans who had been subjected to the practice. “It really flips the process on its head because a debt collector or a debt buyer shouldn’t be targeting anybody for payment of a bill unless they substantiate that a person actually owes the money.”

Midland has said that it changed collection practices back in 2009 after a class action lawsuit was filed against the company in Ohio. That case was recently settled for $5.7 million.

The Star Tribune reported last June that Midland had obtained $30 million in judgments against debtors in Minnesota from 2005 through 2009, the most of any collection firm. The revelation was part of the newspaper’s investigative series entitled, “Hounded,” which revealed the aggressive tactics used by debt collectors.

If you are experiencing a debt collector trying to collect a debt from you that isn’t yours, or if you are being harassed by a debt collector, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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