The language in this bill — primarily, but unofficially, known as the Credit Card Responsibility Bill — that pertains to collection agencies is this:
“In an uncontested court action in this state a creditor may establish the amount of the debt that is owed on a credit card account through a copy of the issuer’s final billing statement or by the electronic record pursuant to section 44-7007 that is maintained by the issuer and that represents the amount owed. In contested actions the court shall weigh the evidence of the parties as required by law.”
"Well yes, theoretically, the courts would weigh evidence. But as we saw in the Florida foreclosure courts, judges simply rubber-stamped the bank requests, no matter how egregious or poorly documented their claims. So I wouldn't count on it."
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So Governor Brewer is making it easy for collection agencies to "prove" the amount that is owed. Now they don't have to go to the trouble of finding and digging through all the records of the original creditor to find out how much is really owed. They just offer the last billing statement.
follow up: If you would like to read why this is a bad idea, with a real-world example from Tennessee, check out law professor Bob Lawless' take on it at the blog Credit Slips. : "The documentation problems identified in LVNV Funding are pervasive throughout the debt collection industry. Because not every court is careful and because not every consumer has good representation, credit card debts undoubtedly are being collected without adequate evidence the debt is due and owing."
4 comments:
On November 05, 2011, you wrote that
Mike Konczal demolishes the right-wing think tank Cato Institute
for their unique brand of free-market capitalism: "I like this form
of libertarianism, where policy is simply the things that defend
the power and hierarchy of creditors, the rich and the elite, much
better than the normal 'gee whiz markets are cool' kind.
There’s almost a Nietzschean zeal for the wonk world to first
and foremost accept creditors as a master class to whom all
policy bends."
In this piece, Konczal is taking apart Cato's bank-friendly,
consumer-hostile prescriptions for the housing market.
Predictably, Cato wants to rush all the foreclosures to conclusion,
never mind the fraudulent or nonexistent proof, and the banks
should get deficiency judgments against people who strategically
default. Public policy needs to be concerned about moral hazard
you see...unless it is the banks who have the moral problems.
Time to bring back debtors prisons, which should of course be private prisons.
www.nytimes.com/2011/06/13/business/13collect.html
"Debt Collectors Ask to Be Paid a Little Respect"
New York Times
June 13, 2011, p. A1
...
“There really ought to be a law on how consumers behave
towards debt collectors,” said [Mark] Neeb [president of
ACA Internaional]
...
After several years in which the overzealous tactics of debt
collectors have been the focus of regulators and media alike,
ACA International has beefed up its lobbying operation in
Washington to pursue a wish list of laws and regulations that
it would like changed.
...
The mission has taken on some urgency. Next month debt
collectors will come under the supervision of a hard-nosed
new regulator, the Consumer Financial Protection Bureau.
Until now, the profession had been regulated by a relatively
toothless Federal Trade Commission, which had the ability to
crack down on rogue debt collectors but could not write rules
and regulations for the industry.
The New York Times story goes on to report that:
"Third-party debt collectors are typically hired by a store,
cellphone company or a bank, to collect a debt that has become
delinquent. Often, huge portfolios of delinquent debt
are sold to a debt buyer for pennies on the dollar; the
debt buyer, in turn, may hire a collection agency, or a
law firm specializing in debt collection."
One reader had a suggestion so brilliant that it ought to be a law:
"Why can't the primary debt holder, instead of selling the debt
to a collection agency, allow the debtor the chance to purchase
his/her debt at the same price and terms the collection agency
is bidding?
The disconnect between the party originating the debt and the
party eventually holding the debt notices is an important part
of the larger debt problem."
-Hank. June 13, 2011. 9:40 AM. Comment # 37.
Personally, given the fraud that I have witnessed (and been a victim of), I would favor the prohibition of selling debt to third parties, period.
Arizona, what more do you need to say....too much sun turns your brain to jello
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