CHARLESTON – West Virginia Attorney General Darrell McGraw said Thursday his office is suing Midland Funding LLC, one of the country’s largest debt buyers.
McGraw said he is going after Midland Funding, a Delaware corporation, and its sister corporation, Midland Credit Management, a Kansas corporation, for using false affidavits to obtain default judgments against state consumers.
In addition, the attorney general said he is suing the two corporations for failing to include information required by law when suing a consumer in magistrate or circuit court for an alleged debt.
Midland is considered one of the nation’s largest “debt buyers,” having bought about $54.7 billion in old consumer debt in recent years.
The company typically buys debt that has been charged-off by the original creditor — usually old credit card debt — for about three cents on the dollar.
In other words, Midland pays about $3 for every $100 of debt it buys, McGraw’s office explained.
The attorney general said because debt buyers like Midland usually only acquire an electronic file about the debt and not actual copies of the underlying charge slips, account statements, etc., consumers are hounded regularly by the companies for payments of bills they do not owe.
In fact, in some cases, debt buyers sue people solely because they have the same or similar name or address as the real debtor. In other cases, they pursue people for bills repaid years ago, McGraw said.
According to the Attorney General’s Office, Midland frequently uses “false” and “unreliable” mass-produced affidavits as supposed “proof” of consumer debts in lawsuits against individual citizens.
The company does this in order to obtain judgments against or extract payments from mostly unrepresented consumers, some of whom had no knowledge of any alleged debt, McGraw’s office alleges.
The National Consumer Law Center has estimated that one out of 10 lawsuits filed by debt buyers are premised on bad or incorrect information.
“Unfortunately, many consumers are frightened or unaware of their rights when they are sued and fail to respond to these groundless lawsuits, leaving them subject to judgments on debts that cannot be proved. Companies such as Midland rely upon this fear and typically drop their lawsuits if consumers know their rights,” McGraw said Thursday.
The Attorney General’s Office began its investigation into Midland’s business practices after receiving complaints from consumers that they had received repeated telephone calls from the company, trying to collect debts they did not owe.
Some consumers also complained they had been sued for debts they did not owe on credit cards they never had.