Michigan Collection Law Blog

My wife and I are on vacation in New York. She would kill me if she knew that I was doing any sort of work including posting anything to my blog. She is still sleeping, so now I can send this note to you.

Today, there is a very interesting article in the USA Today. It talks about banks lowering credit to credit card holders. If/when a bank lowers a consumer's borrowing limit, it will have the unintended consequence of lowering the consumer's credit score (FICO) score. If you do not already know, your FICO score is made up of a number of factors. The thing that makes this article disturbing is that it is not something that the consumer can control. For example, a consumer's credit necessarily takes a hit when the consumer submits a late payment. In this case, the consumer's credit gets dinged by the bank just for lowering the credit limit.

In my experience a bank will most likely look at a consumer's payment history and look at the balance carried and for how long it has been carried before it makes a decision to lower a consumer's maximum credit. In my opinion, if you are carrying a significant balance on your credit card, I would recommend that you find a way to refinance that balance with another lender. While a home equity loan may be a very difficult thing to do today, you may want to consider tapping into your home to pay off your credit card balances. Just be sure not to rack up a large credit card balance again.

I just saw a fairly recent post from a "The Credit InfoCenter Blog." It was arrogantly entitled "Now I'm Giving Advice to Consumer Attorneys." To me, this post highlighted why a consumer ought not to seek legal advice from someone who is not an attorney.

In this person's post, she suggests that a debt should counter sue a creditor who files a suit without the proper documentation to prove the debt. Here is the problem. The law in this area has already been decided. If you review my previous posts (May 4, 2008 entitled "Attorneys for Debt Buyers beware...they are on to us!), you will see that unless a debtor drafts a lawsuit to allege fraud against the creditor, that such a counterclaim will necessarily fail. After all, the purpose of a trial is to determine who is right. A creditor bears the burden of proving the debt. If the creditor comes to trial without the necessary documents to prove his debt, he does not violate the Fair Debt Collection Practices Act. He merely loses a trial. But....if the creditor has a history of pursuing debtors without having the necessary docs to back up his claim, well then, he may be engaging in a pattern of fraud. Its a subtle but important distinction. Again, I have laid out the 2 major lines of cases in this instance in my May 4, 2008 post.

If the debtor's counterclaim fails and the court believes that the counterclaim was baseless, the debtor may get hit with sanctions. How angry would the debtor be at having a judgment entered against him for both the balance due on the complaint plus sanctions??!!!

Bottom Line: Please be very careful when reviewing advice from non lawyers. The CreditInfocenter Blog seem to be very well intentioned. However, they should not give advice and further still, ought not to hold themselves out as giving advice to attorneys. You can almost always find a Consumer Rights Lawyer that will spend some time with you for free. Get the right advice from the right people.

Red Orbit report on the case of Saunders v. Branch Banking and Trust Co. of Virginia, No. 07-1108 (decided May 14, 2008) (Judges Michael, MOTZ, & Keeley (sitting by designation), as follows:

FACTS: On August 31, 2003, Rex Saunders purchased an automobile from Richmond Mitsubishi, and the dealer assigned his loan for the car to Branch Banking & Trust Company of Virginia (BB&T). When Saunders did not subsequently receive a payment book for the new car, he telephoned BB&T and was told that he owed no money on any loan. Thereafter, he visited a BB&T branch and obtained a copy of his loan statement at the bank, revealing that he owed nothing, and checked with the Department of Motor Vehicles, which indicated no liens on the vehicle.

On March 8, 2004, Saunders received a letter from BB&T, informing him his payments were "seriously delinquent," that his loan was in default, and that BB&T had accelerated the payment schedule so that he owed a total balance of $20,441.19, including principal, interest, late fees, and "other applicable charges," all of which was to be paid in full within ten days.

Thereafter, Saunders met with a BB&T lending officer, and said that he would meet his obligations under the loan, but refused to pay any penalties or late fees. The bank refused to waive the late fees or penalties, however. BB&T subsequently repossessed Saunders' car and informed him that he could only redeem it by paying the full amount due, including principal, interest, late fees, and a repossession expense.

On October 24, 2005, Saunders sued BB&T in federal district court, alleging that it violated its duties as a furnisher of information under the Fair Credit Reporting Act (FCRA) by failing to report the dispute. The jury returned a verdict finding that BB&T had intentionally violated its duties under FCRA, awarding Saunders punitive damages.

BB&T appealed to the 4th Circuit, which affirmed.

LAW: FCRA requires credit reporting agencies (CRAs) to follow procedures in reporting consumer credit information that both "meet[] the needs of commerce" and are "fair and equitable to the consumer." 15 U.S.C. [section]1681(b). In addition to the duties it imposes on CRAs, FCRA also imposes duties on "furnishers of information." [section]1681s-2. Under [section]1681s-2(a), FCRA prohibits any person from furnishing information to a CRA that the person knows is inaccurate.

If a consumer notifies a CRA that he disputes the accuracy of an item in his file, FCRA requires the CRA to notify the furnisher of the dispute. [section]1681i(a)(2). FCRA requires furnishers to determine whether the information that they previously reported to a CRA is "incomplete or inaccurate." [section]1681s-2(b)(1)(D).

Here, given the evidence before it, the jury could reasonably have concluded that BB&T's decision to report the debt without any mention of a dispute was "misleading in such a way and to such an extent that it can be expected to have an adverse effect." Dalton v. Capital Associated Indus., Inc., 257 F.3d 409, 415 (4th Cir. 2001). The district court did not err in so holding.

Continue reading "There may be a private cause of action against a Furnisher for failing to flag a debt as disputed by the Consumer." »

The Fair and Accurate Credit Transactions Act ("FACTA") was enacted in 2003 as an amendment to the Fair Credit Reporting Act ("FCRA"). According to Stuart King's Risk Management Blog, he noted that just yesterday, President Bush signed HS 4008 which states:

Except as otherwise provided in this subsection, no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.

Mr. King noted that:

Any American consumer who purchases goods or services from an American based company has a right to take legal action if the receipt from a credit card transaction shows either more than the last 5 digits of the credit card number or the card expiry date. And there are quite significant fines at stake as well. According to this document, Costco, California Pizza Kitchen, FedEx Kinko's, IKEA, Wendy's, TGI Friday's, T.J. Maxx, and Radisson Hotels (among others) are all defending against FACTA class action lawsuits.

I just thought you should know.