Bank of America’s foreclosure processes have been a wreck during the mortgage crisis — the bank has foreclosed on homes that no longer exist, used fraudulent procedures to speed through documents, and pushed borrowers into foreclosure because of small clerical errors. Now, the bank is apparently using its shoddy foreclosure practices on its credit card accounts too.
Kathy Stevens paid off nearly $2,000 in delinquent credit card debt to Bank of America in 2006. Since then, she’s been fighting collection agencies who want her to pay it off again. Bank of America allegedly sold Stevens’ account to outside collection agencies, but did not include documentation to show it had been “considered settled,” according to a lawsuit filed against the outside collectors.
Bank of America is not directly involved in the lawsuit, but it was the mega-bank’s actions that set off the case, American Banker reports:
Shortly after Stevens paid off her debt, Bank of America appears to have sold rights to her account to outside debt collectors affiliated with CACH LLC. The collectors began calling Stevens and sending her collection letters, according to Stevens’ state court filings. They demanded she pay off — with interest — the B of A card account that Plaza had assured Stevens in writing she’d covered.
“They would constantly call, they would constantly mail stuff to me,” Stevens says. Even when she sent the collectors proof of having paid her debt, “that just didn’t seem to be good enough for them. They still ended up taking me to court. The proof is in the paperwork, what more do I have to present to you?”
As American Banker notes, most of the accounts Bank of America sold off to outside collection agencies were legitimately delinquent. But similar to the robo-signing scandal that enveloped it and other banks during the mortgage crisis, the bank’s oversight failures led to the inclusion of accounts — like Stevens’ — where it had incomplete records or where the borrowers owe nothing. Stevens’ attorney said he has represented nearly 500 clients with cases similar to Stevens’, and more often than not, collections agencies fail to produce complete documentation on the accounts in question.
While much of the attention on big banks has centered on fraudulent mortgage practices, government regulators are increasing scrutiny on credit card procedures as well. The Office of the Comptroller of the Currency is investigating credit card practices at banks like JPMorgan Chase, and the newly-formed Consumer Financial Protection Bureau has vowed to investigate fraudulent and predatory credit card lending practices as well.