This Midland Credit Management Lawsuit isn’t just about one case out there; in actuality, there have been several cases in recent times where, time and again, the common people have made allegations against how this company is using super-aggressive and outright illegal or sketchy tactics to collect debt. While the matter itself is not that simple, to understand the true side of it, you’ll have to dive deep. But worry not, to explain the legal side of it all in the simplest words possible, we have done the work. Let’s get to it then.
Let’s Start with the Basics! So, Who Is Midland Credit Management?
It might be that you don’t fully know about the concept of it all, so in actuality, Midland Credit Management (MCM) is a significant player among the collection agencies in the USA.
The most important thing to note here is that different from some collectors, MCM mainly collects the debts it owns. And going a bit more into how it functions, see, it is a subsidiary of the parent company, Encore Capital Group, which purchases uncollected debts such as credit cards, medical bills, and utility accounts at a very low price, less than 10% of the face value. Then, they seek to recover the full amount. Plain and simple!
Yup, it is true that the business model itself is legal, no problem with that whatsoever. The issue lies in Midland’s collection tactics. Like? Oh, to brief you on that, see, to a great extent, the company has garnered a lot of lawsuits, has been calling many people automatically, and has not been very clear with its documentation, thus it has been involved in legal troubles due to these aggressive practices.
How Midland’s Business Model Turned Into a Legal Issue
Talking about how it works, well, mainly, MCM operates on a large scale. Going into the functioning part, see, it purchases large volumes of old debts and then promptly reaches out through calls, letters, and lawsuits. And? See, often, a lawsuit is filed before there is any meaningful discussion.
It might sound kinda sketchy at first, but this is how it works: First, if a person fails to react to a lawsuit within the typical 20-30 days given by most states, Midland frequently ends up having the case decided in its favor by default. The term for this is a default judgment. And right after that, the company is pretty much allowed to garnish wages or freeze bank accounts however they like, you know, without having to provide much evidence in court. That’s the part that a lot of people are kinda suspicious about. Many people think it is a little too much!
The 2016 TCPA Class Action Settlement
Now, to understand it all very well, you should get to know the case where back in 2016, Midland had to deal with a huge class action lawsuit under the Telephone Consumer Protection Act (TCPA).
This one’s pretty interesting for the common people, see, the suit alleged that MCM employed auto-dialers and prerecorded messages to make calls to cell phones without getting the users’ consent first. And sure enough, as per the law, the TCPA provides for penalties for each illegal call.
- Midland agreed to settle.
- Year: 2016
- Settlement Amount: $13 million
- Issue: Automated or prerecorded calls made without permission
- Eligible consumers received payouts ranging from $500 to $1,500 per call.
Later down the line, when this case was pretty much over, more importantly, the case sent a clear message to the debt collection industry: automated calling without consent comes at a serious cost.
