In an example cited in the complaint, a consumer applying for a mortgage was told that a medical debt of $ 1,500 on his credit report by Midwest Recovery had lowered his credit rating, jeopardizing his credit approval. ready. The borrower contacted the hospital and learned that he only owed a co-payment of $ 80, which he then paid. Despite the discovery, the FTC said, Midwest Recovery refused to write off the largest debt and threatened the consumer with lawsuits if he didn’t pay.
In some cases, the company appears to have re-declared debts that it removed from the consumer’s credit reports – sometimes after the borrower paid the company off and ensured that the debt would be written off from the credit report. credit.
The settlement with the FTC, filed with the United States District Court for the Eastern District of Missouri, prohibits Midwest Recovery and its owners from leaving debts and suing consumers for debts without “reasonable basis.” Midwest Recovery should also contact the credit bureaus, which maintain consumer credit reports, and request that all debts reported by Midwest Recovery be removed.
Midwestern Recovery and its three owners, Brandon M. Tumber, Kenny W. Conway and Joseph H. Smith, “neither admit nor deny” the allegations complained of, according to the settlement. A lawyer representing the company and Mr. Tumber did not respond to a request for comment. Attempts to reach the co-owners at a telephone number listed for Midwest Recovery were unsuccessful.
The settlement includes a financial judgment of $ 24.3 million, but payment is in part suspended due to Midwest Recovery’s “inability to pay”, the FTC said, causing the company to pay around 57,000. $. One of the owners must also sell their stake in another debt collection company and pay that amount to the FTC.
The settlement will be final when the judge officially issues the order, said FTC spokesman Jay Mayfield. A judicial conference is scheduled for next week.
Rohit Chopra, one of the five members of the trade commission, voted against the regulation and criticized it as insufficient. In a statement, he said he disagreed with the terms because defendants were not prohibited from working in the debt collection industry and consumers “will receive almost no help.”