Update: For Part 2 of this story, click here.
It’s a scenario everyone knows and dreads: The phone rings with a call from an unfamiliar number. You reluctantly answer, on the chance that someone found the cat that you lost in 1992, but the caller disconnects without saying a word. You’re left to speculate on their identity until the next day when it happens again – from a different phone number with a different area code. Who is making all of these hang-up calls? I think I’ve found the answer. It’s a debt collector named Midland Credit Management (MCM), which has quietly surpassed all of the car warranty and lower-your-interest-rate con artists to become one of the biggest phone spammers in the United States.
I recently singled out Receivables Performance Management (RPM) as perhaps the worst debt collector ever. RPM qualified for this dishonor by using high-volume prerecorded and autodialed calls to harass folks who didn’t even owe it money, and then managing to lose millions of people’s private information to cybercriminals who later trafficked the data on the dark web. Receivables Performance Management has as much charm and competence as a burning portable toilet, and the data breach and subsequent lawsuits might finally be enough to put it out of business as it deserves. (Update: RPM is now indeed out of business! 🥳) MCM isn’t as much of an in-your-face disaster, but it is sincerely committed to its mission of making all of our lives slightly worse.
MCM is owned by the Encore Capital Group conglomerate. Encore and MCM buy up old debts at a steep discount and try to collect them from those who (allegedly) owe them. In theory, there is nothing wrong with this sort of business model. In practice, a lot of the companies in this sector are operated by sociopaths. They view consumer protection laws as merely a minor obstacle to be evaded, while cultural values and moral principles are to be disregarded entirely.
When your competitors are lowlifes and criminals, there is a lot of pressure to cut corners on ethics so that you can be as profitable as they are. That’s part of the Encore Capital story, as the Consumer Financial Protection Bureau discovered in 2015. Encore and its subsidiaries had been engaging in numerous deceptive activities, including collecting debts that were inaccurate or unenforceable. The feds fined the company $10 million and ordered it to pay back $42 million in ill-gotten gains. Encore was also ordered to abstain from these practices in the future, but forgot all about this obligation and was fined another $15 million in 2020. And just last year, the Massachusetts attorney general imposed yet another multimillion-dollar penalty on Encore and MCM for illegal behavior such as using falsified paperwork and making “excessive and harassing” phone calls.
It was MCM’s illegal phone practices that first drew my attention to them. A number of years ago, they began calling my cell phone and hanging up when I answered. It took several weeks before I was able to speak to an agent and learn the story. MCM was conducting a pressure campaign against one of my former neighbors to embarrass her into paying a bill. After the agent confirmed that I knew this woman, and that I knew all of the nuisance calls I was getting were the natural consequence of her financial woes, he seemed satisfied that the company had made its point. “OK. We will stop calling you now.”
These calls were made with an automated dialer. They violated the Telephone Consumer Protection Act (TCPA), and I knew that I could sue MCM for at least $500 for each one. However, I assumed (incorrectly) that this company was now out of my life forever, and that there was no need for me to escalate the situation. I also figured that someone else would bring a class action lawsuit against them, and that I would eventually collect a little bit of cash from that.
Midland Credit Management did get hit with a class action TCPA suit, as I expected, but the outcome was less than satisfactory. Instead of the $500 per call minimum that the law requires, MCM agreed to pay each victim a mere $23.49 – regardless of how many calls he or she had received. I’m not sure how the negotiators arrived at this pitiful amount. My guess is that MCM retained an attorney of the caliber of Felix Frankfurter, while the plaintiffs hired an actual frankfurter. Worse still, much of the money was not even paid. I was one of many claimants who never received the promised compensation, even though the class action’s website confirmed that my phone number was illegally called by MCM during the relevant time period. I followed up with the administrator of the settlement fund, who was evasive about what happened to my $23.49. Maybe it was spent on mustard and relish.
A couple of years ago, the Supreme Court was asked to clarify the TCPA’s definition of an automated dialing system. MCM had a keen interest in the outcome of this case, but it wasn’t in a great position to be publicly advocating for its point of view. After millions of dollars in fines and thousands of consumer lawsuits had failed to stop its shameful behavior, MCM was living proof that the TCPA should be tougher than it is. But instead of keeping a low profile during this battle, the company defiantly filed an amicus brief with the Court. That’s right, MCM asked for the law to be watered down – even though it wasn’t obeying it in the first place, and was using its autodialer as a springboard for other illegal activities. It was as if Al Capone had asked the Court to nullify the Volstead Act, or if Ted Kaczynski had complained that rising postal rates were hampering his outreach campaign. The janitor at the Supreme Court was mopping chutzpah off the floor for the next four days.
The Supreme Court wound up issuing a narrowly worded decision that left the rules largely unsettled. This has been no hindrance to MCM, which has continued to make autodialed hang-up calls regardless of whether they will once again lead to another TCPA class action. (Repeated hang-up calls more clearly run afoul of the Fair Debt Collection Practices Act, but the penalty maxes out at an inconsequential $1000.) MCM rarely uses the same Caller ID twice for these calls, alternating between different toll-free exchanges and various area codes in California, Arizona, Michigan, Minnesota, and Virginia. If your business needs to change its phone number every single day, you’re probably not going to be appearing on any lists of America’s Most Respected Companies anytime soon.
I recently researched the unfamiliar callers who litter my phone records, and discovered something amazing: MCM is responsible for almost all of the spam calls I’ve received in the past 8 months! A hang-up while I’m driving? MCM. A hang-up while I’m eating lunch at a restaurant? MCM again. A hang-up call while I’m riding a unicycle down a skateboard ramp and balancing 17 Franklin Mint collectible plates on my head? MCM was really proud of that one. And there’s no predictable pattern. They might call me every day for a week, take a few months off, and then make a random hang-up call out of nowhere on a Sunday afternoon. I’m not sure how this helps resolve my ex-neighbor’s unpaid bills – which are well beyond the statute of limitations at this point – but MCM has decided that this is somehow a worthwhile endeavor.
Until very recently, MCM’s dubious calls were swamped by those from fraudsters selling fake warranties and phony burial insurance policies. Those scams are now on the decline, as our current commander-in-chief has become the first president since Abe Lincoln to make some real progress in the fight against illegal telemarketing. Several of MCM’s most notoriously obnoxious competitors (including Diversified Consultants, Stellar Recovery, and American Agencies) have also gone out of business, while a few others (such as RPM) are circling the drain. Midland Credit Management and Encore Capital Group have a veneer of legitimacy that those other robocalling spammers didn’t have: a NASDAQ ticker symbol, a swanky office in San Diego, and a CEO who owns at least one shirt that doesn’t feature a logo for an alcoholic beverage. But when you look beneath the surface, it’s the same sleazy tactics – just slightly more subtle, and with more lawyers trying to defend them. Life would be less shitty and the economy would be more vibrant if MCM were to vanish from existence.
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