Robo-Signing Fraud Hits Credit Card Companies. Makes Lawsuits Problematic.

Photo Credit: Sebastianlund

In the last year there has been quite a lot of news about the mortgage industry using a technique called robo-signing. This is where a person is supposed to review documents to proceed against a homeowner and foreclose on their home but in fact never examines the information to see if it is accurate.

Rather than check for accuracy, someone “robo-signs” hundreds of declarations and affidavits a day without there being any possibility they actually did what they are attesting to.

In a suit against Chase bank a judge stated he believed the representative who was testifying for Chase Bank in a credit card lawsuit did not make it clear the information Chase was relying upon was accurate.

Quite possibly as a result of this and other recent cases that have not gone Chase Banks way, Chase elected to halt all lawsuits against consumers while they “corrected” the underlying internal issues on accuracy.

This is a double edged sword for consumers facing such suits. On one hand a challenge to some banks may show the banks do not have adequate documentation to support their claims for money. On the other hand many judges don’t want to hear that argument and just move cases through their courtroom and consumers don’t get a fair opportunity.

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On the heels of the mortgage robo-signing debacle it is quite possible we will see new consumer legislation aimed at banks to provide clear and obvious evidence for the claims they make.

On Monday the Federal Trade Commission and Department of Justice took action against debt buyer Asset Acceptance and one target of that action was the inability of Asset Acceptance to truly verify the debt they claimed was owed.

Both the FTC and DOJ stated their intention is not to create a framework where debt that is factually owed is avoided, but to make sure that climbs for balances owed as true and accurate.

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As always, consumers facing a suit by a bank should show up for any court action against them and now they should ask the bank to prove the amount claimed is accurate. Better yet, people facing such situations should hire a local attorney to defend them and advise them on the issue. Consumer advocacy attorneys can be found through NACA.

While banks claim the problems surrounding documentation is not widespread, there has been evidence for years that the supporting documentation simply can’t be produced. This is especially true if the entity suing is a buyer of debt originated by others. In that case it is highly unlikely the necessary documentation to prove the debt is owed, even exists. Generally all such debt buyers have is a name and balance owed, maybe a screen shot. That’s not going to be enough to support a claim as more courts and judges are made aware of the problems facing the underlying documentation.

Attorneys that defend consumers in such cases filed by debt buyers have claimed an overwhelming number of victories in such situations.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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