by Jeff Sovern
Here. An excerpt:
As with the mortgage cases, the investigation focuses on the banks' poor paperwork and their weak tracking of the debts.
When they sold delinquent credit card debt to the buyers, often at only a few cents on the dollar, they allegedly failed to provide them with the evidence that the borrowers owed the money. It is unclear, however, if the incomplete information was used to pursue borrowers who were not delinquent.
* * *
Investigators are finding that the banks often did not provide buyers of the debt with evidence that individual credit card accounts were delinquent. Instead the banks only provided basic information about how much money they thought was owed and who the borrower was, without providing original contracts, past statements, or other additional documentation.
I would be curious to know the cause of action My guess would be a UDAP violation. The FTC and CFPB are also looking into the matter; perhaps the CFPB could use its power to curtail abusive practices. One interesting feature about this is that consumers are not parties to the sales of the debts, yet they are the ones who are injured. The probe raises a host of questions: for example, if creditors are obliged to furnish the underlying information when selling the debts, presumably their costs will increase. Will they respond by raising prices to debt buyers? And will those higher prices make the purchase uneconomic for the debt buyers? If debt buyers have the paperwork, will they use it to prove their claims, thus depriving the rare consumers who are represented by counsel or otherwise well-advised of a successful defense that the debt buyer can't prove the claim? Will debt buyer claims end up being for lower amounts because the paperwork doesn't substantiate the amounts they have been claiming? Or will the only change be better-substantiated default judgments?