Debt buyer Encore Capital Group, Inc. (Nasdaq: ECPG) announced late Friday that a federal judge has approved a $5.2 million settlement between the company and a class of consumer litigants over Encore’s affidavits used in the legal debt collection process.

The proposed settlement, initially reached in March of this year, was highly contentious as many third parties – including 38 state attorneys general and the Federal Trade Commission – filed briefs with the court to block final approval of the deal.

U.S. District Judge David A. Katz in the Northern District of Ohio approved the settlement Friday.

“I am extremely pleased that Encore is able to put this matter in the past and resolve nearly three years of litigation in a fair and equitable way for consumers and the company,” said Encore President and CEO Brandon Black in a statement. “This ruling is an important step as we clear up the many misconceptions that exist about our affidavit process, and allows us to focus our efforts on helping consumers.”

In 2008, a lawsuit titled Brent v. Midland Credit Management, Inc. was filed in the United States District Court for the Northern District of Ohio. The complaint alleged that wholly-owned Encore subsidiaries Midland Credit Management and Midland Funding used flawed affidavits in connection with collection efforts.

In August 2009, the federal judge presiding over the Brent litigation issued a ruling in the matter. The court identified what it considered to be areas for improvement in Midland’s affidavit process. At issue was the use of so-called “robo-signing” to validate the debts that were underlying collection cases brought by Midland against consumers. In the proceedings, testimony claimed that at least one employee was signing hundreds of affidavits per day, which brought into question whether the cases were being properly reviewed by a company attorney.

Following that ruling, Encore said it conducted a full review of its affidavit process and enhanced it, consistent with the court’s decision.

The case lingered for another 18 months, as both sides attempted to make alterations to the suit in advance of a final settlement. Encore decided to settle several outstanding cases alleging similar missteps, in part due to the national attention being paid to some mortgage servicers and their use of robo-signed affidavits. After a preliminary settlement agreement was made in February 2011, both sides agreed the next month to a final resolution on a nationwide basis of all outstanding cases related to Midland affidavits. The settlement still had to be approved by Katz, the presiding judge.

When the settlement was announced, consumer advocates universally disapproved. Attorneys general in 38 states filed amicus briefs urging Katz to discard the settlement. They argued that the deal might be used as a precedent in latter actions against Encore over its affidavit process and that the $5.2 million award was “paltry” when the size of the class was considered. The FTC made similar arguments in its own brief filed in June.

But Katz wrote in his opinion that the settlement provides “substantial injunctive relief” by requiring Midland to change its affidavit process, while “significantly penalizing” the company for its earlier actions.

“As the judge indicated at the fairness hearing, there have been many ‘rash’ allegations made against the company that simply had no basis in fact,” noted Black.

“After years of litigation by multiple plaintiffs, there was no evidence that the company’s account data were false. The resolution of this case involved simple process improvements and language changes to Encore’s affidavits that would allow the company’s account data to be admitted properly into court,” Ronald Naves, Encore SVP, General Counsel and Corporate Secretary, said. “The alleged defects in the affidavits had no impact on whether or not the debt was owed.”

While the class action case is settled, Encore is still facing legal challenges. In March, Minnesota’s attorney general filed a lawsuit against the company. And the attorney general of Texas followed with one of his own in July. The company has also disclosed that the attorneys general in New York and Oregon have launched investigations that could result in lawsuits.

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