Midland Funding – Cease & Desist in Maryland

The Commissioner of Financial Regulation in Maryland issued a cease and desist order against a group of San Diego-based business entities alleged to have engaged in large-scale unlicensed and illegal collection activities in Maryland.

Ordered to immediately stop all collection activities in Maryland, including but not limited to suspending all current legal actions the companies have filed against consumers in Maryland state courts, were: Midland Funding LLC, Midland Credit Management, Inc. (a/k/a “MCM Inc.”), Midland Portfolio Services LLC, and their parent company, Encore Capital Group, Inc.

The named companies purchase “junk debt” written off by credit card companies and other consumer lenders, for pennies on the dollar. They attempt to collect this old debt by sending letters, making collection calls, and filing court actions against consumers. Midland Funding, Encore and others were not licensed to engage in collection activities in Maryland, yet had filed over 10,000 collection-related actions in Maryland state courts in the last two years, in violation of the Maryland Collection Agency Licensing Act.

In late December, the State has reached an agreement with Encore Capital Group Inc., Midland Credit Management, Inc., Midland Funding LLC and other affiliated companies to settle alleged violations of federal and state debt collection laws.  Under the terms of the Settlement Agreement, the Encore-Midland companies will pay civil penalties totaling $998,000; three of the companies will become licensed as collection agencies in order to engage in collection-related litigation in Maryland State courts; and the Encore-Midland companies will change some business practices to ensure that both their litigation-related collection activities and their non-litigation (or “traditional”) debt collection activities comply with all applicable state and federal laws.  These laws include the Maryland Collection Agency Licensing Act, the Maryland Consumer Debt Collection Act, and the federal Fair Debt Collection Practices Act.