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Encore agrees to settle improper collection claims in New York

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Encore Capital Group Inc., a buyer of consumer debt, agreed to settle claims that it used improper collection methods in New York, the state’s attorney general said amid greater nationwide scrutiny of the practice.

The San Diego-based debt investment firm obtained judgments against New York consumers for debts that were too old to collect, Attorney General Eric Schneiderman said in a statement Jan. 9.

Under the settlement, Encore (Nasdaq: ECPG) will ask that more than 4,500 improperly obtained judgments totaling nearly $18 million be thrown out.

It will reform its practices, and pay civil penalties of $675,000, Schneiderman said.

“New York has laws in place to ensure no one can prey on consumers, and debt collectors are required to follow those rules,” the attorney general said.

The settlement follows other actions Schneiderman has taken over alleged improper debt collection practices.

In May, he reached agreements with other large buyers of debt, Portfolio Recovery Associates LLC and Sherman Financial Group LLC.

Encore is a debt buyer that purchases unpaid consumer debts such as credit card debts from the original creditor or from other debt buyers at deeply discounted prices, Schneiderman said.

Encore’s subsidiaries, which include Midland Credit Management, then attempt to collect on the debt.

Through its subsidiaries, Encore is one of the most active debt collection plaintiffs in New York state, filing tens of thousands of debt collection actions each year, Schneiderman said.

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