By Dan Garner, Nov 19 2015 12:53AM
The Consumer Financial Protection Bureau (CFPB) has begun cracking down on widespread violations of federal and state debt collection laws, obtaining multi-million dollar consent orders from some of the largest players including Chase Bank, Midland Funding and Portfolio Recovery Associates. Among the sins these huge companies promised to stop was (gasp!) “robo-signing court documents” in civil collection lawsuits.
Where have we heard this before? Oh, I remember now! Chase was one of 5 nationwide banks involved in a $50 billion consent agreement with 49 states, the District of Columbia, and the U.S. Justice Department, settling claims that they robo-signed foreclosure related documents illegally depriving hundreds of thousands of people of their homes! Here’s a link to the national settlement webpage: http://www.nationalforeclosuresettlement.com/about
Of course, the banks never mended their ways after this massive settlement as I have reported on my facebook page citing this original article: www.politico.com/story/2015/09/foreclosures-mortgage-lenders-2012-settlement-banks-213322. So I am not sure we can believe that Chase will stop violating debt collection laws either, or that the other big banks involved in this 2012 settlement are not equally guilty of the illegal collection practices admitted to by Chase. (The other banks in the 2012 settlement are Ally/GMAC, Bank of America, Citibank, and Wells Fargo.) We do know that Citibank agreed in July to pay $700 million for deceptive marketing and billing practices affecting some 7 million accounts: http://www.consumerfinance.gov/newsroom/cfpb-orders-citibank-to-pay-700-million-in-consumer-relief-for-illegal-credit-card-practices/. Do we have any reason to believe anything these banks say in the future? But I digress.
The recent settlement with Chase over its debt collection practices requires them to pay $50 million in consumer refunds, along with $166 million in penalties to the federal government and 47 states. Here’s a link to the announcement: http://www.consumerfinance.gov/newsroom/cfpb-47-states-and-d-c-take-action-against-jpmorgan-chase-for-selling-bad-credit-card-debt-and-robo-signing-court-documents/. Among the unverified debts Chase sold to debt buyers were accounts for deceased borrowers. It is unknown how many of those deceased borrowers will receive refunds :).
The two largest debt collectors in the country, Midland Funding and Portfolio Recovery Associates, agreed to pay collectively $61 million in consumer refunds and $18 million in penalties. Here’s the link: http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-the-two-largest-debt-buyers-for-using-deceptive-tactics-to-collect-bad-debts/. According to the CFPB, they “relied on misleading, robo-signed court filings to churn out lawsuits,” many of which were beyond statutes of limitations. But don’t weep too much for these dishonest thieves: the parent company of Midland Funding surpassed a billion dollars in revenue last year and Portfolio Recovery Associates raked in $881 million. This income is from debt deemed uncollectible by the original creditors and purchased for pennies on the dollar.
Studies have found that nearly 99 percent of lawsuits filed to collect debts result in a default judgment because the defendants do not respond. Yet in nearly every case where the defendant appears, the case is dismissed. The debt collectors are counting on the ignorance of the general public to take full advantage of default judgments which lead to garnishment of wages and bank accounts.
The takeaway for this article is NEVER ignore a summons and let a debt collector get a default judgment against you. The odds are in your favor if you stand up for your rights, and you are likely to prevail!
FLASH: This Just In!
Our representatives in the U.S. Congress, always looking out for our best interests, have decided to allow robo-calls to cellphones for the purpose of collecting debts owed to the federal government. This would include debts like student loans and a lot of mortgages. An 80-word section tucked into the bi-partisan budget bill approved November 2nd directs the FCC to write rules governing the new authority to use robo-calls to hunt down debtors.
These types of calls have been illegal since 1991 under the Telephone Consumer Protection Act, but it has proven impossible to enforce. Last year, the FCC received over 215,000 complaints from consumers who had received unwanted calls, despite creation of the Do-Not-Call Registry. So in its infinite wisdom our congress just gave up fighting the wolves. Be sure to file your taxes on time!