There has been plenty of media attention and scrutiny given to the actions of debt buyers in the state of Minnesota in the past couple of years. This includes Attorney General Swanson’s lawsuits against Bradstreet & Associates and Midland Funding, as well as the statute passed by the legislature last year codifying the evidence required for debt buyers to get default judgments in state courts. However, a recent report out of the Boston Federal Reserve highlights that debt buyer lawsuits aren’t just a local problem, but present challenges to consumers and courts nation wide. That report can be found here. The article brings up a few issues, but I think the most important line is this:
“Over the past decade, banks have increasingly moved away from collecting defaulted credit card accounts in-house to a model of selling off bad accounts for pennies on the dollar to debt buyers. The accounts are sold “as is,” pursuant to contracts in which the banks state that the debts may not be owed, the amounts claimed may not be accurate, and documentation may be missing.”
When you step back and think about it, this is mind-boggling. The vast, vast majority of lawsuits brought by debt buyers (and original creditors) include affidavit testimony by a representative of the debt buyer that the individual has personal knowledge regarding the account and the manner in which the account records were kept. These affidavits are executed so that the account records may be admitted into evidence during the course of the lawsuit. On its face, such an assertion is patently ridiculous; the debt buyer’s representative likely has zero knowledge of how the original creditor kept the original records and certainly isn’t a person familiar enough to testify to their authenticity, as required by the Minnesota Rules of Evidence.
Furthermore, in cases where accounts are transferred from the original creditor to the debt-buyer through an agreement that contains the language quoted above, such a routinely executed affidavit is just plain false. An individual who claims to have knowledge of the authenticity and accuracy of account information when that information has been specifically disclaimed by the seller isn’t just stretching the truth; that individual is lying and perjuring themselves.
I have often been of the school of thought that a debt buyer should almost never win a lawsuit because they are unable to lay the requisite foundation in order to have the account records admitted into evidence. However, in cases where the debt buyer has been told the information may not be accurate, but swears otherwise? Well that behavior is criminal. Or at least grounds for an FDCPA lawsuit.
I always tell consumers that they should force the Plaintiff to prove its case when faced with a lawsuit. For the exact reasons stated above, that advice applies even greater when the Plaintiff is a debt buyer.