August 23, 2012
Credit Card Robo-Signers and Bogus Debt
Let's say I loaned you $500. It's a friendly loan, so we agree to some terms and you start sending me a check every month. I'm a little fickle however, so I keep changing the date I expect your check to arrive, arbitrarily change the interest rate, and charge you fees when you're late or when I feel like it - or simply claim I never got your payment. What should have been, in theory, five simple payments of one hundred dollars has now become a convoluted mess of fuzzy math, bad accounting, and erroneous made up fines. Because I keep adding to your original debt payments have gone on for close to a year and have included dozens of confusing communications and frustrating phone calls. One day, out of the blue, you get a letter from me with a court date and a statement for $2000 I claim you now owe me.
If you don't show up for the court appearance, I win by default and you owe me $2000 for a $500 loan. If you do show up, you're going up against me and a stack of affidavits signed by my friends and family swearing that you owe me two grand. So here's the question: Do you come to court and fight me?
Of course you do. I'm a lunatic. Most people would fight against a blatant attempt to rip them off, but according to a recent article in The New York Times the credit card industry has been pulling stuff like this on a pretty regular basis. According to the article, the debt collection industry has been a heavy user of "robo-signed" affidavits. Remember the robo-signing debacle with mortgages? You know, that little blip in the news about pizza delivery guys, Walmart greeters, and hairdressers being paid minimum wage to sit in a room and sign off on fraudulent documents as Vice-President of corporations? Remember the $26 Billion dollars that was supposed to go homeowners that never really made it to anyone? Well, it's back and it appears the banks have been doing the same thing with credit cards.
The Times article covers how credit card companies frequently file erroneous lawsuits, in many cases stating that a customer owes money when they've paid off the balance, or balance is inaccurate. And unlike foreclosure-land, where even after the revelation of widespread and varied mortgage abuses, most judges remained pro-bank, when it comes to credit card debt, the conduct of lenders is so bad that judges are actually showing some signs of skepticism.
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