Maryland Boots Major Debt Buyer from State Over Licensing
A state agency in Maryland issued a sweeping cease and desist order Thursday to a major player in the ARM industry. But the company's CEO said that the charges are without merit and will be resolved shortly.
The Maryland Department of Labor, Licensing and Regulation announced Thursday that it has issued a cease and desist order against one of the largest debt buyers in the country, effectively cutting off access to the state for accounts receivable management work.
The Department’s Secretary, Thomas E. Perez, said in a press release that Encore Capital Group – and several subsidiaries operating under the Midland name – were “alleged to have engaged in large-scale unlicensed and illegal collection activities in Maryland.” The companies were ordered to stop all collection activities immediately, including legal proceedings.
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Midland Credit Management, a subsidiary of San Diego-based Encore that was licensed to collect in Maryland, had its license suspended by the Commissioner of Financial Regulation.
The Department’s press release claimed that Encore, a publicly traded debt purchasing and collection firm, and its affiliated companies could be facing potential penalties and restitution of more than $40 million. It noted that Encore had 15 days to schedule a hearing on the matter.
But Brandon Black, president and CEO of Encore, told insideARM that the company is already in a dialogue with the office that began when management learned of the cease and desist order Thursday.
“Now that we are talking to each other, I think this will get resolved fairly quickly,” said Black.
Black said that his company’s practices comply with Maryland law. “There is no substance to the issued that were raised,” he said. “We believe that this will be taken care of in short order.”
Black said that the ARM industry is an easy target right now, especially large companies. “We’re in an environment where debt collection, and certainly debt buying, companies are an easy mark,” he noted. “It sounds good when a press release like this goes out because people have their opinions about collections.”
Maryland’s Department of Labor, Licensing and Regulation did not return calls before press time Friday.
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Comments
Comment from Uncl Lar on September 18, 2009 at 12:12PM EST
We, in this industry, do present a "target rich" environment. That said, $40M? I'm thinking Encore doesn't just walk. Something's wrong somewhere when you start throwing around numbers like that. Not sayn....just sayn.....
Comment from a Collection Manager on September 18, 2009 at 12:14PM EST
So what was done wrong? Probably nothing. Maryland sucks.
Comment from Anonymous on September 18, 2009 at 2:04PM EST
becuase there is so much publicity regarding the "bad" debt collectors & the economy has contributed to American's current debt status everyone (including federal, state and local govenment offices) are looking for a reason to bring a case against the debt buyer and/or the third party collection agencies to help improve their own financial positions
Comment from DONALD DALY on September 18, 2009 at 3:26PM EST
It would be nice to have the outcome of this case published. It would seem that Mr Perez and the Maryland Dept of labor, Licensing and Regulation would certainly know when there is a violation, especially one that weighs in at $40 Mill. I don't blame Mr Black for aggressively responding to the claim if he's got a leg to stand on and a bunch of lawyers who need something to do. My bet would be that this case will be settled for FAR less than $40 MILL, nobody will admit to any wrongdoing and it will be back to business as usual when the gavel falls.
Comment from Anonymous on October 4, 2009 at 2:44AM EST
I have worked with Encore & i firmly believe that they have set right standards in ARM industry. Short term headache will be resolved soon