The industry trade paper American Banker is reporting in a story by Jeff Horwitz that “Bank of America Sold Card Debts to Collectors Despite Faulty Records” in 2009 and 2010. In a sidebar, editor Maria Aspan tells the story of “Karen Stevens, a Bank of America credit card customer who settled her debt and got proof in writing – but then the bank sold her account to a collection agency, kicking off three years of collection attempts on a bill Stevens had already paid.” Good to know. It confirms a previous study — The Arbitration Trap — by the consumer group Public Citizen that had documented that big banks were forcing consumers to arbitrate and pay “debts” that may not have been owed (some were due to identity theft or sloppy records).The good news is that the new CFPB is expected to take a hard look at the practice of banks selling consumer debts without accurate paperwork. You might remember a practice endemic in the mortgage meltdown called “robo-signing. (USA Today)”
However, there is some good news on the corporate crime front. In the latest fallout from a U.S. Senate Commerce Committee investigation of unauthorized third-party billing on phone bills, Chairman Jay Rockefeller (WV) has announced that ATT has joined other big telcos in finally promising to drop the tawdry practice of “cramming,” which is a technical term meaning “making big bucks by allowing fly-by-night firms selling useless junky products consumers don’t want and didn’t buy to use phone bills as cash registers.” Hat tip to Bob Sullivan’s MSNBC Red Tape Chronicles, where you can read more.
In 2007, Charles Duhigg of the New York Times exposed Wachovia Bank (now part of Wells Fargo), for its role in “Bilking the Elderly.” Wachovia, not accused of any crime at the time, “accepted $142 million of unsigned checks from companies that made unauthorized withdrawals from thousands of accounts, federal prosecutors say. Wachovia collected millions of dollars in fees from those companies, even as it failed to act on warnings, according to records.”
So, as long as they are making money and don’t get caught, banks and telcos generally don’t seem to mind aiding and abetting bad guys. They’re like singer James McMurtry’s outlaw, Uncle Slayton, in the song Choctaw Bingo: “They likes that money, they don’t mind the smell.” Let’s hope more of them get caught when they cheat.
Senior Director, Federal Consumer Program, U.S. PIRG Education Fund
Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.