National Collection Agencies Ordered to Stop Activities in Maryland


Commissioner of Financial Regulation Issues Cease and Desist Order

BALTIMORE (September 17, 2009) – Department of Labor, Licensing and Regulation Secretary Thomas E. Perez announced a cease and desist order (PDF document, 459KB, download Adobe Acrobat for free) was issued by the Commissioner of Financial Regulation 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., as well as their corporate officers, including President J. Brandon Black.

"This action sends a clear message to collection agencies nationwide that Maryland will not tolerate unlicensed activities or other debt collection practices that harm Maryland consumers," Secretary Perez said.

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.

All of the named companies engaged in systematic violations of both federal and state debt collection laws by refusing to validate the debts when challenged by consumers, even though in some cases the alleged debt was decades old.

"Consumers should be aware that, under federal law, they only have 30 days to challenge the validity of a debt after receipt of the first communication from a collection agency," Mark Kaufman, Deputy Commissioner for Financial Regulation, said. "If a consumer receives a collection letter or call about a debt which they don't recognize or which they believe is not theirs, they should promptly send a letter in writing to the company disputing the debt and requesting 'validation' of their alleged debt."

The companies and individuals involved in the case have 15 days to request an administrative hearing and face potential penalties and restitution of more than $40 million.