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Read this if you have a credit card
April 6, 2012 - Harry Eagar
Or even if you don't.
American Banker reporter Jeff Horvitz has been all over the scamsters at, especially, Bank of America, who sell fictitious debts to dubious collection agencies. You don't actually need to have your identity stolen by some script kid in Esthonia. B of A will trash your credit right from home.
Read the whole thing, but the lede grafs tell the story:
"In a series of 2009 and 2010 transactions, Bank of America sold credit card receivables to an outfit called CACH LLC, based in Denve, Co. Each month CACH bought debts with a face value of as much as $65 million for 1.8 cents on the dollar. At least a portion of the debts were legacy accounts acquired from MBNA, which Bank of America purchased in 2006.
"The pricing reflected the accounts' questionable quality, but what is notable is that the bank could get anything at all for them. B of A was not making 'any representations, warranties, promises, covenants, agreements, or guaranties of any kind or character whatsoever' about the accuracy or completeness of the debts' records, according to a 2010 credit card sales agreement submitted to a California state court in a civil suit involving debt that B of A had sold to CACH.
"In the 'as is' documents Bank of America has drawn up for such sales, it warned that it would initially provide no records to support the amounts it said are owed and might be unable to produce them. It also stated that some of the claims it sold might already have been extinguished in bankruptcy court. B of A has additionally cautioned that it might be selling loans whose balances are 'approximate' or that consumers have already paid back in full. Maryland resident Karen Stevens was the victim of one such sale, which resulted in a three-year legal battle (see related story)."
And so on. It's the credit card equivalent of foreclosing on imaginary mortgages, also a B of A specialty.
If it isn't illegal, it ought to be, and it would seem that one presidential candidate or another could make some hay by promising to do something about it. But don't count on that.
Hat tip: Ryan Chittum at Columbia Journalism Review
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