Maryland Boots Major Debt Buyer from State Over Licensing

The Maryland Department of Labor, Licensing and Regulation announced Thursday that it has issued a cease and desist order against one of the largest debt buyers in the country, effectively cutting off access to the state for accounts receivable management work.

The Department’s Secretary, Thomas E. Perez, said in a press release that Encore Capital Group – and several subsidiaries operating under the Midland name – were “alleged to have engaged in large-scale unlicensed and illegal collection activities in Maryland.” The companies were ordered to stop all collection activities immediately, including legal proceedings.

Midland Credit Management, a subsidiary of San Diego-based Encore that was licensed to collect in Maryland, had its license suspended by the Commissioner of Financial Regulation.

The Department’s press release claimed that Encore, a publicly traded debt purchasing and collection firm, and its affiliated companies could be facing potential penalties and restitution of more than $40 million. It noted that Encore had 15 days to schedule a hearing on the matter.

But Brandon Black, president and CEO of Encore, told insideARM that the company is already in a dialogue with the office that began when management learned of the cease and desist order Thursday.

“Now that we are talking to each other, I think this will get resolved fairly quickly,” said Black.

Black said that his company’s practices comply with Maryland law. “There is no substance to the issued that were raised,” he said. “We believe that this will be taken care of in short order.”

Black said that the ARM industry is an easy target right now, especially large companies. “We’re in an environment where debt collection, and certainly debt buying, companies are an easy mark,” he noted. “It sounds good when a press release like this goes out because people have their opinions about collections.”

Maryland’s Department of Labor, Licensing and Regulation did not return calls before press time Friday.