credit & debt

Debt Collectors Suing Credit Card Holders

Tens of millions of people may be wrongfully on the hook for money they don't owe.

Bill Bartmann (pictured) is a consumer advocate and president of CFS 2, a debt-collection agency. Here are excerpts from Kiplinger’s recent interview with Bartmann.

You say there’s a scandal brewing in the credit card industry. What’s going on?

It’s essentially the same “robo-signing” problem that took place in the mortgage arena a few years ago, when lenders signed off on foreclosure documents without sufficiently reviewing them. Customers are being sued, typically by people who buy delinquent credit card debt from the bank. But because the collection agency frequently relies on incomplete information from the banks when signing off on an affidavit, it may sue an innocent person who has the same name as the debtor. Or it may sue someone for debts that have expired under the statute of limitations or have been discharged in bankruptcy.

Why is this coming to a head now?

Thirteen state attorneys general allege that banks, including Bank of America, JPMorgan Chase, Citigroup and Wells Fargo, sold loans to debt buyers with sloppy practices. Separately, the California attorney general filed suit against Chase for debt-collection abuses against as many as 100,000 customers. The Office of the Comp­troller of the Currency is also investigating Chase. For the past two years, the Consumer Financial Protection Bureau has been collecting data on this issue. I’ve never seen a problem attacked by so many groups simultaneously. It’s a big deal, and it’ll hit the banks’ bottom line.

How many people might be affected?

Judging by the volume of lawsuits and reports on how many of them rely on flawed information, I think the number of customers affected could reach the tens of millions.

How could so many faulty documents find their way into lawsuits?

It has become easier and less expensive for lawyers to sue thousands of people at once. Thus debt collectors found that they could afford to sue all of their debtors, even those with small balances.

What are the signs that you’re a victim?

You may get a letter from a lawyer or your wages might be garnished. Pull your credit reports at least once a year to spot problems -- errors in your name or address, a collection item that you don’t owe or that has expired. If you’re improperly sued, contact an attorney. To file a complaint, you can call the Better Business Bureau and your state attorney general’s consumer protection office. Or submit a debt-collection complaint on the CFPB’s Web site.

Most Popular

Dying Careers You May Want to Steer Clear Of
careers

Dying Careers You May Want to Steer Clear Of

It’s tough to change, but your job could depend on it. Be flexible in your career goals – and talk with your kids about their own aspirations, because…
September 13, 2021
5 Top Dividend Aristocrats to Beef Up Your Portfolio
dividend stocks

5 Top Dividend Aristocrats to Beef Up Your Portfolio

The 65-member Dividend Aristocrats are among the market's best sources of reliable, predictable income. But these five stand out as truly elite.
September 14, 2021
7 Best Commodity Stocks to Play the Coming Boom
commodities

7 Best Commodity Stocks to Play the Coming Boom

These seven commodity stocks are poised to take advantage of a unique confluence of events. Just mind the volatility.
September 8, 2021

Recommended

Think Twice About Applying for Credit
Basics

Think Twice About Applying for Credit

Credit card issuers are offering a lot of incentives, but your credit score could suffer.
August 27, 2021
Credit Cards Offer Travel Insurance
Travel

Credit Cards Offer Travel Insurance

Premium rewards cards that may charge an annual fee generally provide better coverage.
August 26, 2021
Tackle Your Debt Before Retirement
debt management

Tackle Your Debt Before Retirement

You should aim to leave the workforce with as little debt as possible. Otherwise, money that could be spent enjoying your golden years could end up go…
August 11, 2021
New Perks From Our Best Rewards Cards
Smart Buying

New Perks From Our Best Rewards Cards

No annual fee, new tiered rewards and more cash back are some of the offerings.
July 24, 2021