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Oberther v. Midland Credit Management, Inc., Midland Funding, LLC, and Encore Capital Group, Inc. (U.S. District Court, District of Massachusetts, Case No. 3:14-cv-30014-KPN)

In a class action complaint, Lemberg & Associates is representing Mary Oberther, who is suing Midland Credit Management, Midland Funding, and Encore Capital Group for violations of the Fair Debt Collection Practices Act (FDCPA). Midland Funding is a debt buyer, and Midland Credit Management collects debt on behalf of Midland Funding. Both companies are subsidiaries of Encore Capital Group.

The suit alleges that the debt collection agencies systematically and uniformly overshadowed consumers’ rights to dispute their debts.

Ms. Oberther had opened an account with Capital One. After the account went into arrears, Capital One sold a debt portfolio for pennies on the dollar to Midland Funding. Ms. Oberther’s account was one of those sold to Midland Funding.

Ms. Oberther subsequently received a letter titled, “Notice of New Ownership and Pre-Legal Review.” It said, in part:

“Midland Credit Management, Inc. is considering forwarding this account to an attorney in your state for possible litigation. However, such forwarding will not occur until after the expiration of the time period described on the back of the letter. Upon receipt of this notice, please call to discuss your options.

“If we don’t hear from you or receive payment by [DATE], we may proceed with forwarding this account to an attorney.

“What do you need to do to stop this process from continuing?
1) Mail in $500.00 and call to set up your remaining payments.
2) Call us to see how to qualify for discounts and payment plans.

“LET US HELP YOU! If the account goes to an attorney, our flexible options may not longer be available to you. There still is an opportunity to make arrangements with us. We encourage you to call us: (XXX) XXX-XXXX.”

In large type, the letter urged Ms. Oberther to call a particular number.

On the back of the letter, it said:

“Unless you notify MCM within thirty (30) days after receiving this notice that you dispute the validity of the debt or any portion thereof, MCM will assume this debt to be valid.

“If you notify MCM, in writing, within thirty (30) days after receiving this notice that the debt, or any portion thereof, is disputed, MCM will obtain verification of the debt or a copy of a judgment (if there is a judgment) and MCM will mail you a copy of such verification or Judgment.

“If you request, in writing, within thirty (30) days after receiving this notice, MCM will provide you with the name and address of the original creditor.”

The class action complaint alleges that the letter misleads the consumer and is deceptive. For example, it alleges that the threats on the front of the letter to turn the account over to an attorney overshadow and contradict the 30-day dispute notice on the back of the letter. The letter gives two options to “stop this process from continuing,” namely to send a payment or to call. It doesn’t mention the option to send in a dispute letter. The letter repeatedly emphasizes calling as the only way to stop the account from going to an attorney, which overshadows the right to dispute on the back of the letter and the requirement that the dispute must be in writing. In addition, the front of the letter says that Midland is considering forwarding the account to an attorney for possible litigation, but that it won’t do so until the expiration of a “time period.” There are two time periods listed on the back of the letter, making it unclear when the attorney referral might occur.

The proposed class for this case is all Massachusetts consumers who received a form letter that was essentially the same as the one sent to Ms. Oberther between January 2013 and January 2014.

The lawsuit revolves around a number of FDCPA-related issues. For example, the FDCPA prohibits debt collectors from using false representations and deceptive conduct to collect consumer debts. Similarly, the FDCPA prohibits engaging in conduct that overshadows or is inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.

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"The FDCPA is a consumer protection statute and was intended to permit, even encourage, attorneys like Lemberg to act as private attorney generals to pursue FDCPA claims."

U.S. Ninth Circuit Court of Appeals, Evon v. Law Offices of Sidney Mickell
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