What Wells Fargo’s Fraud Scandal Means for Your Junk Debt Buyer Lawsuit

Earlier this week the CEO of Wells Fargo retired in the wake of its recent fraudulent account scandal. It was recently disclosed that for years Wells Fargo employees were secretly opening bank accounts, issuing credit cards, and signing customers up for online banking – all without the customer’s consent. Wells Fargo then charged its customers fees associated with these products resulting in huge revenues for the bank.

Wells Fargo fired approximately 5,300 employees who were involved in setting up the fraudulent accounts.

Wells Fargo was fined $185 million dollars including a $100 million fine issued by the Consumer Financial Protection Bureau (CFPB) and ordered to refund all money taken from customers connected with the fraudulent accounts.

Wells Fargo is not alone in it actions that harm consumers. The CFPB recently fined Navy Federal Credit Union $28.5 million for improper debt collection actions, First National Bank of Omaha was fined $32.25 million for illegal credit card practices, Wells Fargo was fined $3.6 million for illegal student loan servicing practices (Wells Fargo is having a rough year), Santander Bank was fined $10 million for illegal overdraft practices, and it goes on and on.

What Wells Fargo’s Scandal Means for your Debt Collection Lawsuit

Over my career as a consumer protection attorney I have defended thousands of consumers and represented clients in hundreds of trials. My focus is helping those who have been sued by a junk debt buyers like Midland Funding, Portfolio Recovery, CACH, LLC, Cavalry SPV, and countless other collectors.

These companies purchase debt from banks like Wells Fargo once Wells Fargo decides that it can no longer collect on the account. The bank charges the debt off and packages it up with thousands of other delinquent accounts and sells them in portfolios to junk debt buying companies.

The banks sell the accounts to the debt buyers for pennies on the dollar – sometimes even less than a penny on the dollar.

These transactions rarely contain much documentation that could substantiate the debt in court.  And when the trial does finally come I often hear attorneys for the junk debt buyers tell judges that the documents they are submitting should be considered “trustworthy” and “reliable” because the debt buyer “only buys debts from reputable sellers”.

And this is where the issue of scandals like the fraud perpetrated by companies like Wells Fargo could have influence on your junk debt buyer case.

In times past I have found that courts would often buy into the debt buyer’s argument that their documents were reliable because “pillars of the community” like Wells Fargo, Chase Bank, Citibank, and others were the issuing banks.

However with these endless scandals and mistreatment of consumers courts should give pause before taking it as a given that the original creditor in a debt buying lawsuit is a “reputable seller”.

Courts should hold the feet of the junk debt buyer to fire and make them adhere to the Rules of Evidence that require that each document be authenticated before it can be admitted into evidence.  Routinely courts will allow a representative of the debt buyer to authenticate documents created by an original creditor.  This is a problem because almost with exception the representative of the debt buyer has no knowledge whatsoever as to how the bank’s documents were created, stored, and if the information contained within the document is correct.

Making debt buyers follow the Rules of Evidence will ensure that courts are only receiving reliable documentation from parties that are in a position to actually know if the documentation is accurate, if they are suing the correct party, and if the amounts requested are accurate.

Have You Been Sued by a Junk Debt Buyer?

If you have been sued by a junk debt buyer and need assistance the attorneys at the Arizona Consumer Law Group offer a free consultation where we can sit down and put together a game plan on how you can defeat the junk debt buyers once and for all.  Give us a call at (480) 420-4028.