I have written previously on the bias that consumers face from courts and others when they challenge a creditor who is suing them on a debt. The source of this bias, in my opinion, is partially due to the trust that people put in large banks. For reasons that are unknown to me, there seems to be a tendency to believe that big banks do not make mistakes and that their motives are always pure. Some of this stems from the mistaken belief that because the banks are regulated that it isn’t possible for them to do wrong – but the daily news tells us this isn’t so.
Consumer Financial Protection Bureau Goes After the Big Banks
This past summer the Consumer Financial Protection Bureau took several of the major banks to task over the tactics used to collect on debts. Here is sample of the actions taken against banks:
- Chase Bank USA, N.A. – In 2015 Chase was assessed $166 million dollars in fines and penalties and ordered to refund $50 million dollars to consumers for illegal collection practices associated with selling accounts to junk debt buyers. Just two years prior, in 2013, Chase Bank was ordered to refund $309 million dollars for illegal card practices.
- Bank of America, N.A.: In May 2015 the Office of Comptroller of the Currency (“OCC”) assessed a $30 million dollar fine for Bank of America (FIA Card Service) illegal debt collection activities. One year earlier the Consumer Financial Protection Bureau ordered Bank of America to pay $727 million in consumer redress due to deceptive marketing and billing practices.
- Discovery Bank: In July 2015 Discovery was ordered to pay $18.5 million dollars for illegal student loan servicing tactics including creating “student debt stress for borrowers by inflating their bills and misleading them about important benefits”.
One of the striking aspects of these penalties is that in the case of Chase Bank and Bank of America they were repeat offenders and the current penalty was assessed right on the heals of significant penalties issued just one year prior. The message that the banks need to play by the rules is clearly not getting through. And the financial benefit that the banks are obtaining through employing the illegal collection tactics must outweigh the penalties being dished out – as if these penalties are merely a cost of doing business.
Banks Often Get a Pass in Court Proceedings
Despite the parade of horrors that you find on the CFPB homepage when it comes to banks disregarding federal collection laws creditors often get a pass in court proceedings because “the debtor must owe it…why else would the creditor file a lawsuit?”. Often the documents submitted as evidence get only a passing glance and are admitted into evidence despite missing pages, inaccurate information, and the lack of a witness who has any of the necessary knowledge to authenticate the document.
Witnesses for junk debt buyers like Midland Funding, Portfolio Recovery Associates, Cavalry SPV, and CACH, LLC often state that the bank documents are above reproach because they (debt buyers) only buy accounts from “reputable debt sellers”. The rulings from the Consumer Financial Protection Bureau find the exact opposite to be true – banks will push the line when it comes to following federal debt collection laws like the Fair Debt Collection Practices Act (“FDCPA”) and even when they are called on it by agencies like the CFPB they tend fall back into their old ways a short time later.
Consumers Need to Educate Courts on the Findings of the Consumer Financial Protection Bureau
Consumers who find themselves fighting creditors or junk debt buyers in a debt collection lawsuit need to educate the court as to the findings and the sanctions that have been imposed by agencies like the CFPB and the OCC against banks and the junk debt buyers they sell to. The courts are not seeking out this information on their own and unless consumers bring it to their attention they will continue to hear only the side of the bank/debt buyer – that the big banks are “reliable” and trustworthy even though that is clearly not the case.