Debt Buyer/Collector Settles Class Action for $575,000

A federal judge late last month approved a settlement between a purchaser and collector of consumer debt and a class of approximately 3,000 consumers in Maryland. In addition to paying out $575,000, the related companies are to drop the debt collection lawsuits filed against the consumers in the plaintiff class.

The case, Winemiller et al. v. Worldwide Asset Purchasing et al. was filed in 2009 and a settlement was reached in March of this year. Judge Richard D. Bennett issued a final order on the agreement in U.S. District Court on Aug. 24.

The defendants are a group of collection agencies and debt buyers including Worldwide Asset Purchasing LLC, Worldwide Asset Purchasing II, West Receivable Services Inc. and West Corp.

The case alleged that the companies were not properly licensed to collect in Maryland and that they “consistently misstated the total amount of the principal, wrongly including interest and fees in the principal calculation,” in violation of the Fair Debt Collection Practices Act (FDCPA). Further, the case alleged that some of the debts pursued in court were beyond the statute of limitations.

After denying the defendants’ motion to dismiss in April 2011, the parties reached a settlement agreement earlier this year.

As class representatives, Winemiller will receive $10,000 and two other parties will each receive $7,500. After attorneys’ fees and other costs of $231,970 are taken out of the fund, the rest will be distributed to the other class members who file claims. Other class members will receive no more than $500, but any pending legal actions against them will be dropped and the debts will be removed from their credit reports.