At the very beginning of this week, the Wall Street Journal had an interesting article on how banks that are located mainly in Wal-Mart stores collect a lot of fees from their customers, who tend to have bad credit histories.
From the Washington Post, there is an article on the debt buying industry and the sloppy mistakes they make when trying to collect on old credit card debt when they take people to court. The Consumer Financial Protection Bureau (CFPB), a relatively new government agency, has taken an interest in oversight of the debt-buying industry and it may try to set standards for debt buyers to meet when they take people to court. As the article points out, it’s a good idea to get an attorney when a debt collector is hounding you or trying to drag you into court, so that you have a fighting chance. The article is here.
Pennsylvania Congressman Matt Cartwright introduces interesting legislation to amend the Fair Debt Collections Practices Act (FDCPA): The FDCPA protects consumers against some of the abuses of the debt-collection industry. But last year, the U.S. Supreme Court said that a consumer may have to pay the costs of the debt collector, where the consumer does not win. So Rep. Cartwright proposed legislation that would change the FDCPA to require that debt collectors can only be awarded costs where the consumer brought its lawsuit in bad faith or in order to harass. The press release is here.
On May 13, 2014, the FDIC announced that it settled its case against Sallie Mae, accusing the student-loan giant of unfair and deceptive practices and violations of the Servicemembers Civil Relief Act (SCRA). Sallie Mae agreed to a consent order and to pay civil penalties of $6.6 mil. Sallie Mae’s violations include: Inadequate disclosure to student loan borrowers; distributing student loan payments across loans in such as way as to maximize late fees; misrepresenting and inadequately disclosing how borrowers could avoid late fees; and misrepresentations and inadequate disclosures to service members regarding their rights under the SCRA. Sallie Mae is supposed to make “clear and conspicuous” disclosures about how to avoid late fees and to treat service members properly under the SCRA. Here’s the press release.
This week, Adam Levitin has an essay in American Banker about forcing consumers into mandatory arbitration whenever a consumer wants to sue for a violation of consumer rights. Levitin argues that a consumer’s rights are not adequately preserved when the consumer is forced out of the court system and into arbitration.
