Serious problems are now emerging in the debt collection practices of big credit card companies like American Express, Citigroup, and Discover Financial. The concerns imitate a recent abuse in the foreclosure system, known as “robo-signing”, where banks produced similar documents for different homeowners and did not review them.
The bank lenders are filing lawsuits without regard for accuracy, and improperly (and sometimes illegally) collecting debts from consumers. Many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee these cases.
For example, in 2011 American Express sued consumer Felicia Tancreto, claiming that she had stopped making payments and owed more than $16,000 on her credit card. According to court records, Ms. Tancreto contested owing the full amount. The American Express employee who testified against Ms. Tancreto provided generic testimony about the way the company maintained its records, the judge noted during the case. This April, the lawsuit was dismissed, citing a lack of evidence.
It is becoming apparent that such errors are increasingly common in credit card suits. Â In certain instances, lenders are trying to collect money from consumers who have already paid their bills, or the banks are increasing the size of the debts by adding erroneous fees and interest costs. While some consumers argue that they owe money at all, it is most common that borrowers are behind on their payments but contest the size of their debts.
According to judges who have dealt extensively with these cases, credit card companies are not always following the proper legal procedures, even when they have the right to collect money. Certain cases hinge on mass-produced documents because the lenders do not provide proof of the outstanding debts, like the original contract or payment history.
