In one example cited in the complaint, a consumer applying for a mortgage was told that a $1,500 medical debt placed on his credit report by Midwest Recovery had lowered his credit score, putting his loan approval at risk. The borrower contacted the hospital and learned that he owed just an $80 co-payment, which he then paid. Despite the finding, the F.T.C. said, Midwest Recovery refused to remove the larger debt and threatened the consumer with a lawsuit if he didn’t pay.
In some cases, the company appears to have re-reported debts that it had removed from the consumer’s credit reports — sometimes after the borrower paid the company and was assured that the debt would be struck from the credit report.
The settlement with the F.T.C., filed in U.S. District Court for the Eastern District of Missouri, prohibits Midwest Recovery and its owners from debt parking and from pursuing consumers for debts without a “reasonable basis.” Midwest Recovery must also contact the credit reporting bureaus, which maintain consumer credit reports, and ask that all debts reported by Midwest Recovery be deleted.
Midwest Recovery and its three owners, Brandon M. Tumber, Kenny W. Conway and Joseph H. Smith, “neither admit nor deny” the allegations in complaint, according to the settlement. A lawyer representing the company and Mr. Tumber didn’t respond to a request for comment. Attempts to reach the co-owners at a phone number listed for Midwest Recovery were unsuccessful.
The settlement includes a financial judgment of $24.3 million, but the payment is partly suspended because of Midwest Recovery’s “inability to pay,” the F.T.C. said, so the company must pay about $57,000. One of the owners must also sell his stake in another debt collection company and pay that amount to the F.T.C. If the defendants are found to have misrepresented their ability to pay, the full judgment is due.
The settlement will be final when the judge officially enters the order, an F.T.C. spokesman, Jay Mayfield, said. A court conference is scheduled for next week.
Rohit Chopra, one of the trade commission’s five members, voted against the settlement and criticized it as inadequate. In a statement, he said he disagreed with the terms because the defendants were not barred from working in the debt collection industry and consumers “will receive almost no help whatsoever.”
Source: | This article originally belongs to Nytimes.com
