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Hernandez v. Midland Credit Management

March 14, 2006

FRANK HERNANDEZ, JR., PLAINTIFF,
v.
MIDLAND CREDIT MANAGEMENT, JUDGE REBECCA R. PALLMEYER INC.; MRC RECEIVABLES CORPORATION; AND ENCORE CAPITAL GROUP, INC., FORMERLY MCM CAPITAL GROUP, INC., DEFENDANTS.



The opinion of the court was delivered by: Rebecca R. Pallmeyer United States District Judge

MEMORANDUM OPINION AND ORDER

On November 14, 2004, Plaintiff Frank N. Hernandez, Jr. received a dunning letter from Defendant Midland Credit Management, Inc. (hereinafter, "MCM,") as part of MCM's attempt to collect more than $3,000 in debt. MCM enclosed a privacy notice with this letter, disclosing that MCM or its parent corporation, Defendant Encore Capital Group, Inc. (hereinafter, "Encore"), might share nonpublic information gathered in the course of debt collection with certain nonaffiliated third parties, and that Hernandez had the option to opt out of such disclosures by taking certain affirmative steps. Contending that these statements violate the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (hereinafter, "FDCPA"), Hernandez brought suit against MCM and Encore for statutory damages and attorneys fees.*fn1 Specifically, Hernandez believes that the privacy notice indicates either that Defendant MCM and Defendant Encore actually engage in prohibited third-party disclosures and publications of debtors' information, or have illegally threatened to do so as part of a debt collection effort.

Hernandez now moves for judgment on the pleadings. For the following reasons, the court denies his motion.

STATEMENT OF FACTS

Illinois resident Hernandez, at some unspecified point, incurred several hundreds of dollars' worth of debt to Providian National Bank. (Compl. ¶ 3, Ex. A at 1.) MRC Receivables Corp.*fn2 (hereinafter, "MRC,") acquired Hernandez's debt from Providian National Bank. (Id.)

On November 14, 2004, Hernandez received a dunning letter from MCM,*fn3 stating, in relevant part:

MRC Receivables Corp. recently purchased your PROVIDIAN NATION B account and Midland Credit Management, Inc. ("MCM"), a debt collection company, is the servicer of this obligation. As the new servicer of this account, we would like to find a positive resolution to your account.

Midland Credit Management, Inc. (MCM) is currently able to offer you a substantial discount of 50% off your Current Balance if we receive payment by 12-29-2004.

What's In It For You? Once MCM receives your payment of $1,567.63, we will:

* Notify the credit bureaus that the debt is "Paid".

* Immediately stop all recovery activity on this account. (Compl. ¶¶ 19-20, Ex. A at 1.) The letter explains that any payment on the debt--to which an MCM account number was given--should be made payable to MCM and remitted to MCM. (Id. at Ex. A. at 1.)

Both MCM and MRC are wholly owned subsidiaries of the publicly-traded Delaware corporation Encore.*fn4 (Id. at ¶ 11.) Defendant Encore prepared a privacy notice that Hernandez received with the dunning letter. (Id. at ¶ 21.) The privacy notice states that Encore, on behalf of its affiliates, including MCM, "is delivering this Privacy Notice so that you understand what nonpublic personal information we gather about you, how we use or share that nonpublic personal information, and the safeguards we have in place in order to protect that nonpublic personal information." (Id. at Ex. A at 3.) The privacy notice explains that:

In connection with collection on, or servicing, your account, we collect nonpublic personal information about you from the following sources:

* Directly from you, application or other forms (e.g., your name, address, social security number, telephone number and other information obtained from our communications with you);

* From your account transactions with us, our affiliates or others including, without limitation, the originating creditor (e.g., account balance, payment history, ...


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