Wednesday, March 30, 2011

Minnesota AG Tags Major National 'Zombie Debt' Buyer With Robosigner Suit

In Minneapolis, Minnesota, the Star Tribune reports:
  • Employees at a giant debt collection company in St. Cloud "robo-signed" thousands of collection documents without verifying their accuracy, allowing false and deceptive lawsuits to be filed across the country against consumers who didn't owe money, the Minnesota attorney general charged Monday.
  • The state lawsuit against Midland Funding LLC, one of the nation's largest debt collection firms, is the first enforcement action in the country against a debt collector for robo-signing, Attorney General Lori Swanson said.
  • Midland workers admitted signing up to 400 affidavits a day without reading them or verifying whether a debt was owed, according to the lawsuit. Often, the debts were 10 or more years old, known as "zombie debt," that Midland had purchased for cents on the dollar from credit card companies and other businesses, Swanson said.


  • 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.
  • Encore and Midland are part of the booming debt-buying industry, which purchases electronic databases of billions of dollars of old, charged-off consumer debt from credit card companies, banks, telecommunications firms and others.
  • Debt buyers receive just one line of data on each debtor, including the name, an address and the amount, Deputy Attorney General Nate Brennaman said. When purchasing debts, Midland and other companies do not purchase underlying charge slips and contracts to prove money is owed, according to the lawsuit.

For more, see State files suit against debt firm (Collections giant is accused of "robo-signing" documents).

For the Minnesota AG press release, see Attorney General Lori Swanson Charges One Of The Nation's Largest "Debt Buyers" With Defrauding Minnesota Courts And Citizens By Filing "Robo-signed" Affidavits.

Go here for the Minnesota AG consumer release on the zombie debt buyer industry.