Apparently robo-signing might not be a practice reserved solely for the foreclosure crisis.
West Virgnia's attorney general is suing two units of a debt collection company, Encore Capital Group, alleging that they robo-signed affidavits when they were trying to get default judgments against West Virginia borrowers, according to Bloomberg. For their part, Encore officials said that the lawsuit came as a "surprise," according to the West Virginia Record.
As the economic downturn pushed more Americans deeper into debt, the debt collection industry has boomed, and the sector is coming under increased scrutiny. Consumer complaints to the Federal Trade Commission about debt collectors rose 17 percent in 2010, according to USA Today. The agency last year filed a complaint against another debt collection company, this one based in California, alleging it used aggressive tactics to get borrowers to pay up -- even when they didn't owe any money.
In addition, the FTC announced in January that a Michigan-based debt collection agency is paying $2.5 million to settle charges of misconduct. The Consumer Financial Protection Bureau -- another consumer watchdog -- may also be pursuing debt collectors as part of a larger effort to crack down on alternative lenders, according to a January report from TIME.
The boost in enforcement could be because debt collectors are becoming a presence in the lives of many Americans. One in seven consumers are being pursued by a debt collector, according to Matt Stoller, a fellow at the Roosevelt Institute.
That's a good deal more than the number of U.S. households facing foreclosure -- more than 80 times more, in fact. And since even that much smaller foreclosure percentage caused a complete robo-signing crisis, there is cause for concern.
Indeed, the nation's five largest lenders recently signed an agreement with the U.S. government to pay $25 billion to settle allegations of questionable and illegal lending practices, with robo-signing among them.
More:Business News Consumer Financial Protection Bureau Federal Trade Commission Debt Collectors National Mortgage Settlement
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