Credit card debt collection may achieve the dubious distinction of making mortgage servicers look good.
The New York Times has been keeping a bit of a watch on this area, and reported earlier that credit card debt collection was a heavy user of robosigned affidavits. A new story recounts how credit card companies frequently file erroneous lawsuits, sometimes saying a customer owes money when they’ve paid off the balance (sound familiar?) but more often, the consumer disputes the accuracy of the balance. And unlike foreclosure-land, where even after the revelation of widespread and varied mortgage abuses, most judges are pro-bank, in the credit card realm, the conduct of lenders is so bad that experienced judges are skeptical of them. From the article:
As they work through a glut of bad loans, companies like American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases.
Lenders, the judges said, are churning out lawsuits without regard for accuracy, and improperly collecting debts from consumers. The concerns echo a recent abuse in the foreclosure system, a practice known as robo-signing in which banks produced similar documents for different homeowners and did not review them.
“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” said Noach Dear, a state civil court judge in Brooklyn, who said he presides over as many as 100 such cases a day….
The problem, according to judges, is that credit card companies are not always following the proper legal procedures, even when they have the right to collect money. Certain cases hinge on mass-produced documents because the lenders do not provide proof of the outstanding debts, like the original contract or payment history.
At times, lawsuits include falsified credit card statements, produced years after borrowers supposedly fell behind on their bills.
But the big reason that the credit card companies can ride roughshod over the law is that so few consumers contest these cases. The article reports that 95% go uncontested, meaning the lender will win a default judgment and can then garnish wages or bank account balances.
And if you think it’s bad with the credit card companies, it’s even worse with the bottom feeders. A colleague has a sister who lives in Texas, where the statute of limitations on unpaid debts is four years. Apparently a hedge fund is backing a company that buys bad debts from credit card companies, debt they’ve already written off, shortly before the statue of limitations is about to expire, for pennies on the dollar. They then file suit. They don’t even plan to spend any money fighting, they just intent to win default judgments. So if you hire a lawyer and merely file an answer, you win. But a remarkably high percentage of people fail to do that.
And for the credit card companies, the critics can substantiate their doubts about the accuracy of documentation. For instance:
In 2010, Discover sued Taryn Gregory for more than $7,000 in credit card debt. Ms. Gregory, of Commerce, Ga., had fallen behind on her bills, but said she had accumulated only $4,000 in debt.
After the suit was filed, Ms. Gregory, a 41-year-old child care assistant, asked Discover for proof of the balance. The resulting documents, which were reviewed by The New York Times, have inconsistencies. One statement, for example, says it was produced in 2004, but advertisements on the bottom of the document bear a 2010 date.
We’ve gone back over 300 years, to the ugly time before the 1677 Statute of Frauds. And the worse is too few people seem to appreciate how destructive that is not just to commerce, but to faith in the authority structure.
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Faith in “the authority structure”? Oh please. The piece is definitely spot on, and conforms to my experience of credit card lawsuits, but does anyone think that credit card companies are part of “the authority structure”? Since when are banks and their bottom-feeding children the credit card companies seen as anything but venal profit-mongers willing to screw anyone for a buck? Especially since 2008, “the authority structure” has basically collapsed, it only seems to have substance to those not paying attention, or who are paid to see things otherwise.
“Authority structure” is the rule of law. Which, to an extent, is self-reinforcing. You could say that under any law, criminals go to the court. You can then figure out whether in your situation the law is a public good or not based on whether the criminals are the prosecuting or defending party.
Gotcha vlade, I was feeling cranky when I wrote that. :) But seriously, who the hell thinks banksters are part of that structure anymore, and not a direct contravention and challenge to the rule of law?
Law is not inherently good or bad, socialist regimes were persecuting people under their own laws perfectly legally (which made it really hard to do anything later on).
Of course, flouting the law is yet another thing, and I’d say that we’re currently very much there.
I’d just say it’s not limited to bankers, they are just the most visible ones since banking touches everyone whether they like it or not.
To say the “authority structure” is the rule of law….. is meaningless.The rule of law doesn’t mean anything if there is no even application of that or any law.That is the problem.Sometimes people get nailed by the rule of law and sometimes other don’t seem to even feel like they need to pretend to be doing things by “the rule of law”. Laws are written in english, yet, when it comes to enforcement,some people have standing others don’t…This is a basic issue of fairness.
There was a good bill moyers episode with elizabeth warren, they were discussing the “contracts” the credit card co.’s send out with their billing statements. According to warren, the one sided contract they send out, meaning they not you have the right to change anything at any time is not a contract. it takes two parties to agree to a contract. and just saying to someone,”if you don’t like it, give me all the money I say you owe”isn’t a contract. If a freshman in her contract law classes tried to make something like that at her classes at harvard, they would get an “F”.So i disagree that there is an authority structure, there is just a screw.
Fascinating subject this one, and while I can only offer an anecdotal, it ties in with what the article is saying.
I used my credit card to pay for a furnace repair, the job done on a time and materials basis so when I called the company’s contact centre (the company was a big utility who offers home repairs as a sideline) I gave them my card details and the understanding was that they’d finalise the billing when the total cost was know (i.e. after the repair was made).
While the service guy was at my house, we discussed some upgrades which I was interested in for the central system. Fine, was happy to do that. But that increased the time on the call and ended up with a higher billing. So when I got my card statement I went back, like a good card holder should back to the merchant (the utility co.) and disputed the transaction. The merchant was obliging and said, yes, a mistake was made, we’ll refund the amount due.
So I waited. And waited. And called the merchant again. And waited. And wrote to them. And waited. Nothing.
Getting no actual action from the merchant, just being yessed to death, I thought my only option was to put the transaction into dispute with the credit card company. This they duly did. After a while though, they told me that the merchant hadn’t responded to their enquiry and that I would have to resolve things with the merchant. Erm, no, it was a card-not-present transaction and the credit card provider has to sort out a dispute. Here in Britain, the law was ratified by the House of Lords (now the Supreme Court) and the card provider industry knows that very well. After a good long while arguing with the credit card company I realised that they (so they thought) held all the cards, so to speak and I was just your average 99%-er and could go and jump in a lake as far as they were concerned. Business as usual then (the credit card company is a TBTF). So I advised the card provider that I would close out the account, settle the balance apart from the disputed amount. I would then happily see them at the County Court if they tried to enforce a judgement for the delinquent amount on the card. I suggested to the credit card company that they might have an entertaining time trying to convince the judge that it was the court’s responsibility to find out about the legitimacy — or not — of the transactions. I further added that the judge would probably not be best pleased if s/he was supposed to contact the merchant to sort out the facts of the matter. The penny dropped for the card provider at that point — if they bring an enforcement, it is they not the card holder, not any merchant, nor any officer of the court who has to prove the debt is valid.
I got my refund then. But it was really quite illuminating that the internal processes of the credit card provider were so very dumb that they didn’t get at all that they had to — if it came to it — verify that the debit being pursued e.g. due to a delinquent card account was valid. My guess is that they haven’t got any sort of paper trial and/or their systems don’t lend themselves to producing the sort of evidence to a standard which would satisfy a Court Production Order.
If I am every unlucky enough to fall on hard times, I’m going to make ’em “prove it” if they have to enforce a debt recovery action :-)
Years ago I had both a checking account and a credit card with SunTrust. I used and still use a credit card just for convenience, paying off the balance in full every month. One month many years back I noticed when I was making an ATM withdrawal that my checking account balance was far too low, so low that I could easily have bounced checks without knowing it.
I looked into my transactions history online and found that my credit card balance had been paid off in the middle of the month between statements, several weeks before a statement was due. So I called the SunTrust credit card center in Orlando to ask why they thought they could reach into my checking account without authorization and pay a bill before it was due. They said that I had authorized it on one of the forms I filled out when I opened the credit card account. I challenged that, sure I would have remembered it, and told them to send me a copy of the agreement. When I got it, somebody, obviously from SunTrust after I had called about this issue, had forged my initials on the document. Fortunately for me, whoever did it was so stupid that they used the wrong middle initial. I called them back and hit the roof, asked them was it common practice to forge customer signatures or initials on documents and if not were they going to find and fire whoever had done it on my document. Of course, they gave me nothing but a halfhearted apology, so I cancelled the credit card account.
I would have moved the checking account but I pay no fees, they have ATMs that are convenient to me and they can’t be making much if any money on the account, so I left it. A little while back I got a call from them asking if I wanted a SunTrust credit card and I said no thank you, I had one before but your bank paid it off from checking account without authorization and then forged a document to say I had authorized it. That got her off the phone quickly.
Statute of Frauds? That sounds like a legal term, and as is painfully obvious as it is the rule of law has been conquered by the rule of money in the land of the incorporated lawless.
Heads back in the sand.
The staute of frauds is an english law from 1648 which primairly says that if a contract is about real estate it must be in writing.
There are groups of people out there who make a living suing their creditors. They bait collections agencies into violating Federal law, and then sue.
It doesn’t surprise me that they can’t prove they owe the debt.
For those who are interested: http://www.debtorboards.com/
It’s not easy reading, but if you take the time to do the research you can win.
“faith in the authority structure”
LOL
good one.
These companies hire folks to do this work who failed as burger order takers, no surprise they mess up.
“We’ve gone back over 300 years, to the ugly time before the 1677 Statute of Frauds. And the worse is too few people seem to appreciate how destructive that is not just to commerce, but to faith in the authority structure.” Y. Smith
While this quote is a reference to our banking/credit system, it also applies to the perceived legitimacy of our institutions, including the U.S. Government. Among the primary reasons individuals submit to authority is that they sense that the authority is fair and equitable. I have not yet read an author positing that the unfairness being displayed by an array of institutions is leading to a legitimation crisis – perhaps because I haven’t really looked, but I see the enormous public dissatisfaction of the public with the government as at least a partial response to this unfairness – that and the insane rhetoric that “government is the problem” – with the conclusion that shrinking government, gutting regulation thereby allowing frauds to run free – is the solution. The further down this road we go, the less will be the people’s faith in democracy – this is a road I wish to avoid.
tI have moved around quite a bit in the process of trying to stay employed and Three times I have had credit collection companies put old bills on my credit rating that had already been paid YEARS ago. One was for a cable bill for September when I had settled up and left with a zero balance the following April. If I had missed a September payment it would have been paid then, (but I had not done any such thing) One was a bill for a closing electric bill that was less than half of the deposit that the Utility had from me. (they said “Oh That money was in another account (with the same number) They actually owed me $122. One was a bill for a car that I had wrecked while renting it where I had paid the blue book value to the rental company. I took a copy of my canceled check over to the collection agency and they were quite disquieted, “Sorry Sorry we were sold a bad bill”.
Then I got a bill from another cable company for a cable box that I had a receipt for having returned. Selling debt that you do not owe years after you have moved seems to be a habit with cable companies and some others. Hopefully that practice will become much harder with the advent of electronic billing and Yahoo mail which has YEARS of my receipts on file. They have lasted longer than my backup media. I just hope that Yahoo lives forever.
And know we come back, lmost full circle, back to the “authority structure”. How is the common man to know what is legal enforced and what is fraud? The only saving grace we have is that most of us simply “move on” until we are not even allowed to do that anymore. This type of problem with false billings and a corrupt court system will erode peoples’ faith in their goovernments like ocean air to metal. The fact that you have to argue for your innocence is backwards.
With Dominishing returns being a global occurence, the people managing banks are outto squeeze every available last drop of blood from the American consumer. No wonder people are doing with less and eschewing consumption. There is no more trust.
Thankfully the common man now has the web, were in the past it took a lawyer to fix the issue. One must in these cases write the appropriate letter pointing out that if the statute of limitations has expired and or its not your bill and send it return reciept requested. Do not use the Telephone and think it might not be conviently forgotten that the call ever happened. Certified mail eliminates the denability. Of course for the 7k or so bill it might be worth $100 to have a lawyer write the letter, because it then goes to the agencies legal department.
Recent Complaint to Postal Inspectors:
In Early September 2011, I received phone calls from a debt collector about money owed to Discover credit card. I knew nothing about it neither from personal records, nor from recent credit reports; eventually I received a written record from the collection agency, so I wrote directly to Discover Bank and asked them to investigate.
Instead of doing that, they carefully and deliberately created about four years worth of altered (FORGED!) credit card statements, with my name and address (that they got from my recent letter), in place of the original. They then mailed them to me, along with a demand for payment, and multiple lies claiming previous contact and discussions about the account, all completely false. I had never seen any of this paperwork before, nor had I ever received mail or phone calls from them.
By some clerical error, they included six copies of canceled checks with the name, address and phone number of the actual holder of the account, a different person, about 120 miles away, who has a similar name. By searching public records, I found that person had sold his residence and moved away more than two years before, long before any collection effort.
They committed open and barefaced mail fraud when they used forged documents sent by mail in an attempt to extract money from me. Their clumsy clerical errors do not change that fact. Neither was there any misunderstanding, dispute or mistake; their action was deliberate and intentional.
FORGERY! is a normal and routine part of their business; keep that in mind.
I thought I was beyond being surprised, but this shocked me. Did you try to get them prosecuted for fraud? It sounds like something someone could go to jail for.
Yes Canada has its own set of law-breaking corporate issues. However, the WSJ article in the mid 90s called us “a banana republic” due to our federal deficit. Deficit was gone by 1999 and the “banana republic” call is fit for your country to wear quite well. This credit card fraud along with MERS fraud are but two tips of the iceberg as much more lie beneath the garbage line.
Well, don’t take personally what the WSJ said about Canada back then. The US was running a budget surplus during some portion of those years, and the WSJ still griped about the general course of things, just using terms different than banana republic.
Now of course, the WSJ is more than happy to call the US a banana republic.
The WSJ editorial board is rarely happy with any nation, unless it be some third world country in the thralls of the IMF.
Don’t take their criticisms seriously. Certainly not in any nationalist sense.
Regardless of the inaccuracy of the amount of debt, from my personal experience, I can tell you there is one thing very obviously criminal in these cases for which bankers and their lawyers should be jailed. They are dragging debtors into court but committing perjury by claiming in the court documents affidavit that they have examined all the supporting documents and their accuracy. I was sued by a major credit card company while I was broke. When I contested it with my version of facts, without a lawyer (I did not have any money for the lawyer), bank and its attorney went into hiding and never showed up in the court despite multiple hearings by the judge. I will like to go after this credit card bank and its lawyer for potential perjury and other torture practices. If any lawyers are interested they can contact me (California location) butrogali at yahoo
Perjury is a criminal offense. You should probably contact your district attorney’s office as a starting point.
At the very LEAST sue them for your costs (inclusing whatever it cost to file a lawsuit). Yeah sure thats where they shine and they will probably win and or postpone it indefinately, but you will be making them spend money on it and they will have to spend WAAAAY more than you.
Absolutely do that–sue them for the costs involved in their BS lawsuit.
While it would be nice to have your local DA prosecute them for fraud, that will not happen. He/she is far too busy dealing with street crime and so on–even if they had the inclination to go after a bank, which they don’t.
You can most likely file your suit for less than a hundred bucks. Good luck, and don’t give up.
Under the Federal Debt Collection Practices Act, you are allowed to challenge the validity of a debt that a collection agency states you owe to them. Use this letter and the following form to make the agency verify that the debt is actually yours and owed by you. Keep a copy for your files and send the letter registered mail.
Date
Your Name
Your Address
City, State Zip
Collection Agency
Collection Agency Address
City, State Zip
Re: Acct # XXXX-XXXX-XXXX-XXXX
To Whom It May Concern:
I am sending this letter to you in response to a notice I received from you on (date of letter). Be advised, this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested.
This is NOT a request for “verification” or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your office provide me with competent evidence that I have any legal obligation to pay you.
Please provide me with the following:
What the money you say I owe is for;
Explain and show me how you calculated what you say I owe;
Provide me with copies of any papers that show I agreed to pay what you say I owe;
Provide a verification or copy of any judgment if applicable;
Identify the original creditor;
Prove the Statute of Limitations has not expired on this account;
Show me that you are licensed to collect in my state; and
Provide me with your license numbers and Registered Agent.
If your offices have reported invalidated information to any of the three major Credit Bureau’s (Equifax, Experian or TransUnion), said action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following:
Violation of the Fair Credit Reporting Act
Violation of the Fair Debt Collection Practices Act
Defamation of Character
If your offices are able to provide the proper documentation as requested, I will require at least 30 days to investigate this information and during such time all collection activity must cease and desist.
Also during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with my legal counsel. This includes any information to a credit reporting repository that could be inaccurate or invalidated or verifying an account as accurate when in fact there is no provided proof that it is.
If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately.
I would also like to request, in writing, that no telephone contact be made by your offices to my home or to my place of employment. If your offices attempt telephone communication with me, including but not limited to computer generated calls or correspondence sent to any third parties, it will be considered harassment and I will have no choice but to file suit. All future communications with me MUST be done in writing and sent to the address noted in this letter.
This is an attempt to correct your records, any information obtained shall be used for that purpose.
Best Regards,
Your Signature
Your Name
One minor item certified mail return reciept requested should be enough. Registered mail is really for items of intrinsic value, which the letter in and of itself has little value. Us governmnet classified documents may be sent using either method according to Wikipedia.
Thank you. This is what I should have done on three occasions. Next time I will know.
Hannibal, thanks for this useful information, but I hope I never need it.
One apparent minor flaw: the statutory reference “15 USC 1692g Sec. 809 (b)” seems slightly erroneous. The “Sec. 809” appears to be noise. I believe the reference should read “15 USC 1692g(b).”
One item that reinforces the next-to-last paragraph of the letter (but IANAL!): the next-to-last sentence of this statute seems to forbid ANY collection activity after that letter is received by the debt collector, until it provides requested verification.
See http://www.gpo.gov/fdsys/pkg/USCODE-2011-title15/pdf/USCODE-2011-title15-chap41-subchapV-sec1692g.pdf .
A few months after I bought my house, a collection agency claiming to work on behalf of Citibank contacted me to collect a twelve-year old credit card debt of $1800. They claimed it was for a Citibank Mastercard I’d apparently run up back in the late nineties and early aughts. I told them there must be some kind of mistake because I’d never had a Mastercard with Citibank. But with time and memory being what they are, I told them to just send me copies of the signed card agreement, statements, and whatever receipts they had. Naturally, none of those were forthcoming, just a phone call telling me I “need to pay the debt and get back on track”. I told them that the next time I spoke with anyone from that company, it had better be a licensed attorney.
I never heard from that agency again. But about a year after that, a new agency was contacting me about the same debt, using the same tactics. I gave the same responses, and got the same results. The process has repeated itself a total of four times in the last 3 years. The strangest part is that I am a customer of Citibank and they seem to have no problem extending me credit.
It’s very strange. All I can think of is that someone with a similar name to mine or who had an address similar to mine must have gone delinquent. I came up on a mailing list as a recent homebuyer so they sent me a letter. Wouldn’t surprise me if half the “delinquent borrowers” out there are actually targetted in error.
“It’s very strange. All I can think of is that someone with a similar name to mine or who had an address similar to mine must have gone delinquent. ”
Nope, they are junk debt collectors trolling for an easy pay day.
Sounds familiar. Years ago I had a CapitalOne card, which I used to pay for Internet access through BT. I left Britain so tried to terminate the account with BT, got the runaround, told CapitalOne no further payments were authorised. They went on billing me, despite many objections. Sent registered letter of termination to BT with copy to CapitalOne, paid outstanding balance, said I was closing my account with CapitalOne; if they went on making unauthorised payments to BT they would not be reimbursed, so they would be wise to stop. Bills from CapitalOne ceased for about 18 months – after which they suddenly started arriving, with new monthly charges from BT, late payment fees, then threats of legal action, letters from debt collection agency.
It looked as though at least one, possibly both companies had some wage slave whose job it was to generate dodgy bills, presumably because enough people wouldn’t bother to challenge them, or would pay for a while before refusing, so it was worth their while, even for this paltry little amount (about £15 a month). I say this because I kept explaining the circumstances to one raving debt collector after another, sending documentation, getting more threats and more bills with yet more late fees. That was actually part of the business model. So I said Fine, if you want to go to court, let’s go to court. I’ll enjoy that. Then you can tell the judge why you stopped sending bills 18 months ago, when I terminated the account, and then started honouring requests for payment from BT on a card that had been terminated a year and a half earlier. And then you can pay legal costs on top of whatever you’ve paid BT. You go right ahead. And they sent a letter saying they were closing the account ex gratia or some such thing.
(I realise the amounts in question were petty, but it was stressful at the time – the alternative to all this wrangling seemed to be to go on paying up for the rest of my life.)