Lawsuit Accord to be Challenged by States

Lawsuit Accord to be Challenged by States

6/22/2011

 

Attorneys general in thirty-eight states are planning to legally challenge a proposed class-action settlement which they said could potentially make it harder for state law-enforcement personnel to regulate debt collectors.

The proposed settlement involves an agreement entered into by Encore Capital Group Inc in February to pay around $5.7 million to settle all class-action suits brought against it. The company, which is the biggest debt buyer by revenue in America, has been accused of violating several federal and state laws with defective or fake affidavits.

In a 2009 ruling by U.S. District Judge David A. Katz in Toledo Ohio, he said that encore employees utilized “false and misleading” affidavits in order to collect credit card debts. An employee of the company provided testimony saying that he signed between 200 and 400 affidavits daily, only a handful of which were reviewed for correctness.

This month, the thirty-eight attorneys general asked the judge to throw out the proposed settlement. They argued that the approval of the settlement would help the debt-collection industry to evade enforcement actions by officials of the state.

The state attorneys general said that Encore could potentially use the settlement as a precedent throughout the country, arguing that other allegations of defective affidavits would be thrown out because of the Ohio settlement deal. Some say that the outcome could very well shape the legal strategy of the industry when it defends itself in future enforcement actions.

WRITTEN BY:

blakeh@wellsdrew.com