Don Bauder 9:40 p.m., May 21
Appeals court scuttles Encore robo-signing settlement
Thirty-eight states said payment "paltry"; stock plunges 7.21%
Stock of Encore Capital, which purchases defaulted consumer receivables, plummeted 7.21% today (Feb. 26) to $29.08 after a federal appeals court voided a $5.2 million settlement over charges that Encore used false affidavits and illegal tactics to collect debt from 1.44 million consumers. The earlier settlement was meant to resolve claims that an Encore subsidiary's employees relied on false or robo-signed affidavits to collect debt. No fewer than 38 states said that the settlement was paltry. The AARP (American Association of Retired Persons) said the settlement "rewards debt collectors for business practices that rely upon rampant fraud and abusive collection practices." Under the settlement that the appeals court threw out, the typical consumer would receive $17.38, but remain exposed to lawsuits by the Encore subsidiary seeking money the consumer may owe.