Encore Capital Group Must Vacate 4,500+ Judgments in New York

I have a quibble with this quote from the New York Times‘s Jessica Silver-Greenberg, which she uses to set the stage for her reporting on the Encore Capital Group settlement:

The same problems that dogged the foreclosure of homes — and prompted public outcry and a multibillion-dollar settlement by some of the nation’s biggest banks — are increasingly showing up in the practices of large buyers of bad consumer debt.

Debt buyers were engaging in assembly-line litigation long before the foreclosure firms started. I’ve been writing about it here for years, but it’s just never gotten the same kind of exposure as the foreclosure industry’s callous disregard for the courts briefly did.

New York’s Settlement with Encore

Still, some people are paying attention. State attorneys general, namely (albeit occasionally). Yesterday the New York Attorney General announced a settlement with Encore Capital Group in which Encore agreed to pay a paltry $675,000 settlement and vacate more than 4,500 judgments against New York residents.

I’d be more impressed with the settlement except that $675,000 and ~4,500 judgments represents a drop in Encore’s bucket. In 2013, Encore collected $564.7 million. And according to Silver-Greenberg, “Encore Capital and its subsidiaries filed more than 239,000 lawsuits from 2007 to 2012.”

While I’m sure Encore would rather keep its money, it’s hardly going to notice.

The Effect on Consumers

More importantly, the settlement does nothing to reverse the effects on consumers. I’m not sure exactly how garnishment works in New York, but it’s probably similar to Minnesota. Here, once a creditor (i.e., Encore) has a judgment it can seize wages and money in bank accounts. After the money is taken, the consumer can get it back only by proving it is exempt from garnishment.

Even though 4,500+ judgments will be vacated, I will be shocked if consumers whose money was seized have an easy time getting a refund. For many, the damage has already been done anyway.

(h/t Daniel Gershberg)