Lori Swanson Gets It Right on Debt Collectors

Hurray for Minnesota's attorney general, Lori Swanson. She went after one of the debt collection companies that victimize people and just settled with one of them for $500,000.

That's not much, maybe, but more importantly, Midland Funding LLC agreed to what sound like reasonable rules for how they will operate. According to the Star Tribune, Midland will:

• Ensure it's not trying to collect "zombie debt," (beyond the statute of limitations)
• Change the way it serves lawsuits to ensure people know they are being sued
• Verify both the amount of debt and the identity of who owes it, and "show that information to people before the company sues them to collect."

That last point appears to be particularly difficult for Midland to get right. Swanson's press conference included personal statements from three people who were pursued despite the fact that they were not the person who owed the money. All of them have common names (William Harris, Andrew Martin, and Ka Yang, which is a very common name among Hmong-Americans). Midland took $9,000 from Yang's account, and she only got it back by hiring a lawyer, which cost her $2,000. Martin was thought to owe money to Citibank, and Harris was listed as owing money to Capital One, despite the fact that he's never had a credit card.

How can a company prove they have the right William Harris out of all the William Harrises? With the information companies like Midland receive from the credit card companies, how can they even prove the amount is owed by anyone?

And here's the kicker: Midland's parent company is called Encore Capital Group. (The name is clever but also sick, since it's basically a brand promise to be the debt collector who keeps coming back no matter what.) It's a publicly traded company with profits last year of $61 million, and it has been on Fortune's 100 Fastest Growing Companies list for the last two years. This is how people make money these days, and what your 401(k) might be invested in.

More prosecutions of other vulture companies are in the works. Go, Lori Swanson -- make them all behave like halfway civilized human beings.