Debt buyer Midland Funding LLC agreed to pay Minnesota $500,000 to settle a lawsuit filed last year by Minnesota Attorney General Lori Swanson. The lawsuit accused the company of robo-signing affidavits in collection lawsuits and sometimes targeting the wrong people for payment of debts it bought from banks and credit card companies.

Midland Funding, a subsidiary of San Diego-based Encore Capital Group, is not admitting any wrongdoing as part of the settlement, which was announced late Wednesday.

The companies, in a statement, said a fresh review by a former federal judge found their current practices are sound. Much of what was agreed to has been in place since 2009 when Midland Funding voluntarily strengthened its processes for generating affidavits, they said.

“After significant effort examining our company, Midland confirmed to the Minnesota Attorney General that no systemic issues were found with our current affidavit process. In addition, we confirmed that the underlying consumer debts are valid and that our current affidavit process accurately describes those debts,” Greg Call, Encore’s senior vice president and general counsel, said in the statement.

In sworn testimony, Midland Funding employees admitted that they signed up to 400 mass-produced affidavits each day either without reading them and/or without knowing what they contained or if the information was accurate, Swanson’s office said in a statement.

Under a consent judgment, Midland Funding agreed to verify its information before attempting to collect on debts, to provide full information to people about the debts they allegedly owe and to give them the chance to dispute illegitimate demands for payment. When it sues debtors, it agreed not to file affidavits with Minnesota courts unless the people signing them have read and understood them and verified the authenticity of any accompanying documents.

Midland Funding has filed more than 15,000 lawsuits in Minnesota courts against individuals since 2008, according to Swanson's office. The company’s lack of verification and reliance on incomplete and/or inaccurate information resulted in many people being sued for debts that they either never owed or paid off long ago, and consumers feeling forced into settlements for much more than the original debts because of growing interest and attorneys’ fees, the lawsuit alleged.

Midland Funding has paid more than $2.1 billion to purchase about 40 million accounts with a face value of about $66.4 billion, or about three cents on the dollar, mostly from banks, credit card companies and cellphone companies that had written off the bad debts, the attorney general’s office said.

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