Agency: Federal Trade Commission (FTC)Washington
Description:
On November 25, 2020, Midwest Recovery Systems reached a settlement agreement with the Federal Trade Commission (FTC), ) where they are prohibited from the practice, known as “debt parking,” and required to delete the debts it previously reported to credit reporting agencies.
Under the terms of the settlement, Midwest Recovery and its owners will be prohibited from debt parking and pursuing consumers for alleged debts without a reasonable basis. The settlement also requires Midwest Recovery and Tumber to contact credit reporting agencies and request all debts reported by the company be deleted from consumers’ credit reports.
The settlement includes a monetary judgment of $24.3 million, which is partially suspended based on an inability to pay. Tumber and the company will be required to pay $56,748, and Tumber will also be required to sell his stake in another debt collection company and provide the proceeds from that sale to the FTC. In addition, Midwest Recovery will be required to surrender all of its remaining assets. If the defendants are found to have misrepresented their ability to pay, the full amount of the judgment would become immediately payable.
Details of the case can be found on the FTC website.
Date of Action: 11/25/2020
Agency: Federal Trade Commission (FTC)Washington
Description:
On November 25, 2020 the Federal Trade Commission (FTC) filed a complaint against Midwest Recovery Systems, LLC alleging the debt collection company placed unsubstantiated and questionable debts onto consumers’ credit reports to coerce them to pay the debts.
The FTC’s complaint alleges that Midwest Recovery received thousands of complaints each month about the purported debts from consumers, with the company itself finding that between 80 and 97 percent of the debts it investigated were inaccurate or not valid. In addition to payday lending debts, the complaint notes that the company parked significant quantities of medical debt, which is often a source of confusion and uncertainty for consumers because of the complex, opaque system of insurance coverage and cost sharing.
The FTC’s complaint alleges that the company and its owners, Brandon M. Tumber, Kenny W. Conway, and Joseph H. Smith, violated the fair debt collection and credit reporting practices. The FTC complaint alleges Midwest Recovery collected more than $24 million from consumers on such debts, largely by debt parking.
Details of the complaint can be found on the FTC website.
Date of Action: 11/25/2020