Following multiple years of advocacy, Tzedek DC has secured relief for 299 current and former DC residents harmed by abusive and illegal debt collection practices. The relief was obtained through a settlement with Midland Funding, a subsidiary of the billion-dollar multinational corporation Encore Capital that is one of the nation’s largest debt-buying companies.
Previously, the District of Columbia and 42 states investigated and ultimately entered into a settlement with Midland Funding after the multi-state investigation uncovered practices that violated federal and state laws, including the federal Fair Debt Collection Practices Act and Fair Credit Reporting Act. Midland Funding was alleged to have used "robo-signed" affidavits containing unverified and potentially inaccurate information against consumers in debt collection lawsuits from 2003 to 2009, leading to hundreds of fraudulently obtained default judgments in DC Superior Court.
The settlement provided $577,783 of relief to DC consumers and required Midland Funding to reform its practices. The multi-state settlement did not, however, address the judgments that remained on the DC Superior Court docket. Accordingly, following the settlement, the DC Office of the Attorney General referred hundreds of individual DC resident victims to Tzedek DC to help address the judgments that were still on the record in civil court against the victims.
In 2020, Tzedek DC, together with pro bono co-counsel consumer-side class action law firm Tycko & Zavareei, began legal advocacy on behalf of victims in the matter with Midland. This work has focused on ensuring that the judgments on the court dockets, which often are searched by prospective employers and landlords, would not cause continuing harm to the victims.
As a result of that advocacy by Tzedek DC, Midland Funding (and several affiliates) ultimately filed 279 satisfactions of judgment—statements that the individual no longer owes Midland Funding any money on the underlying judgments—and 20 additional motions to vacate judgments that Midland had previously obtained and to dismiss those cases with prejudice. The DC Superior Court has now granted each of those motions, and relief for these DC community members has been secured in a total of 299 cases.
“Tzedek DC’s diligent and effective advocacy resulted in critical relief for District residents. Their work to stand up for District residents, especially those taken advantage of by debt collectors, changes lives,” said DC Attorney General Karl Racine. “Abusive and illegal debt collection practices especially hurt the District’s most vulnerable consumers, who may not have the means or resources to fight a debt collector in court. Thank you to Tzedek DC, I look forward to continuing to work together to hold bad actors accountable and help make residents whole.”
“Our victory would not have been possible without the extensive efforts of Tzedek DC’s Staff Attorney A.J. Huber and Associate Director Sarah Hollender, as well as our pro bono co-counsel Jonathan Tycko of Tycko and Zavareei,” said Tzedek DC Founding President & Director-Counsel Ariel Levinson-Waldman. “These cases serve as a reminder of the extent to which abusive debt collection practices affect District residents. We also appreciate the confidence shown by the OAG in our office.”
Tzedek DC is grateful as well to the American College of Trial Lawyers Foundation. The Foundation, which is dedicated to improvement in the quality of trial and appellate advocacy, the administration of justice, and the ethics of the legal profession, provided substantial grant support to help make Tzedek DC’s work on these matters possible.
A major systemic advocacy goal of Tzedek DC’s is to make DC’s debt collection rules fairer to residents with low incomes by ensuring that DC law has basic due diligence requirements that must be satisfied before a debt buyer can file a lawsuit against an individual resident. In today’s marketplace, debt buyers purchase billions of dollars of debt and attempt to collect based on spreadsheets of summary information that are frequently inaccurate, incomplete, or outdated. Failure to verify or correct the information before pursuing consumers for collection often results in collection attempts against the wrong individuals, for inaccurate amounts, or for debts that have already been paid or are beyond the statute of limitations.
Tzedek DC, the DC Office of the Attorney General, and public interest allies are currently advocating for DC’s first permanent legislation reforming debt collection rules in over 50 years by, among other things, expanding the scope of existing law to include credit card and medical debt and requiring debt collectors to substantiate their claims with documentation of the debts they are filing lawsuits to collect. The DC Council is expected to vote in the coming weeks on the landmark legislation that, if passed, would help protect DC consumers from abusive and unfair debt collection practices going forward.
About Tzedek DC
Tzedek DC’s mission is to safeguard the legal rights and financial health of DC residents with lower incomes facing the often-devastating consequences of debt collection and credit-related obstacles. This mission is carried out as racial justice work in response to the massive wealth gaps tracking race in DC and nationwide. Of Tzedek DC’s clients, 90% are African American, 60% are women, and 25% are disabled community members. Our strategic approach combines three synergistic activities: (i) free legal representation and advice and financial counseling; (ii) working in coalition to make systemic change; and (iii) providing community legal education on debt collection, identity theft, and credit management. Since 2017, Tzedek DC has served over 2,500 DC client households in legal matters, saving an average of $2,151 per full representation case—the equivalent to more than three and a half weeks’ wages at DC’s minimum wage—and has helped catalyze systemic reforms benefiting hundreds of thousands of DC residents.
