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Recent “Bank Of America” Procedures Raise Some Questions

Bank of America’s recent sales of some old credit card debts to a debt buyer has raised questions about whether claims about the debts are accurate or accurate records exist.

A recent story from American Banker (link: discusses some sales of credit card debt by Bank of America. The buyer was CACH LLC, which is a company which purchases consumer debts and then works with law firms who attempt to collect on them.

Although the debts had a “face value” of as much as $65 million, CACH purchased it for 1.8 cents on the dollar, according to American Banker. That means CACH paid approximately $1,170,000 and would make more than $63,000,000 if it was able to completely collect all the money Bank of America says its former customers owe.

But the sales agreements for the accounts raise major questions about how much is actually owed.

A 2010 sales agreement for the credit card accounts stated Bank of America was making no “representations, warranties, promises, covenants, agreements, or guaranties of any kind or character whatsoever,” about the accuracy or completeness of the records for the alleged debts, American Banker said.

“In the ‘as is’ documents Bank of America has drawn up for such sales, it warned that it would initially provide no records to support the amounts it said are owed and might be unable to produce them,” American Banker’s article states. “It also stated that some of the claims it sold might already have been extinguished in bankruptcy court. (Bank of America) has additionally cautioned that it might be selling loans whose balances are ‘approximate’ or that consumers have already paid back in full.”

While Bank of America sold debts with questionable records, it is not the only offending credit card company, according to American Banker. The magazine cites a 2009 U.S. Bancorp agreement detailing plans to sell delinquent accounts as saying the bank “may have failed to credit borrowers for some payments and only guarantees the accuracy of account balances within a 10 percent margin of error.”

In 2008, Chase Bank sold $200 million of credit card debt to Palisades Collection, although the bank stated documentation proving the money was owed might not be available for almost half the accounts.

Despite Bank of America’s statements the debts it was selling might lack the paperwork to support its claims, following the sale of the accounts there have been thousands of lawsuits seeking repayment of the money, American Banker states.

According to American Banker, even though Bank of America had warned about the accuracy of the amounts owed for the accounts it sold, sworn affidavits from Bank of America “vouch for the borrowers’ debts down to the penny and declare that the bank’s ‘computerized and hard copy records’ back the claims.” There were also other possible discrepancies, American Banker claims.

American Banker also noted that in thousands of state court cases, CACH included one page from its sales agreement with bank of America showing it purchased the debt. Not included in many of the filings, however, was “more than 30 additional pages where Bank of America disclaims the accuracy of its debt records,” American Banker states.

American Banker quotes a spokesperson for the American Collections Association as being critical of the documentation debt collectors receive from original creditors.

“We’re not getting what we need from the seller,” said Mark Schiffman, a spokesman for the American Collections Association. “Consumer groups want to see original contracts and original documentation. That would make a lot of these debts disappear because a lot of that documentation may not exist.”

The recent revelations about the issues with the accounts sold by Bank of America and Chase raise many questions which consumers need to be aware of if any of their debts are sold to a debt buyer. This and other problems provide multiple reasons courts need to take a more critical eye when companies like CACH and Palisades Collection file lawsuits claim to be owed money from credit card debts, particularly if they are unable to produce the supporting documentation.

Category: Articles

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