Collection Deception -- Debt Buyers

Capital One, FIA Card Services, Discover, etc. are all original creditors — typically, not subject to the Fair Debt Collection Practices Act. Some of these credit card companies will try to collect an unpaid credit card from you using their in-house collection department. For example, Capital One Services, LLC, is the in-house debt collector for Capital One Bank — also, not usually subject to the Fair Debt Collection Practices Act.

Here's the problem for many consumers dealing with Capital One: Capital One Services, LLC, employs third-party debt collectors, such as Allied Interstate or Northland Group, to collect on defaulted credit card accounts. But there's a catch: The third-party debt collector calls itself a "servicer" of the account and pretends that the account is not in default in order to get around FDCPA liability.

A consumer will receive letters that look like they are coming from Capital One Bank — they have a big Capital One logo, they include a bunch of friendly and soothing talk like "we value our relationship with you" and "ask us about restoring your charging privileges" (when that is, as a practical matter, a lost cause). Any information that indicates that a third-party debt collector is involved is buried in miniscule six-point type such as "Servicer: Allied Interstate."

This is as unfair and deceptive of a collection tactic as there ever was. It is all designed to fool the consumer, like that magic trick, the shell game, where you can't possibly guess which cup hides the marble because the cups keep moving. Consumers don't know who is in charge of their account: Is it the original creditor? Is it the in-house collection department? Is it a third-party debt collector?

Debt Buyers Have Nothing To Lose Through Aggressive Debt Collection

Now, suppose you are receiving mail from someone other than Capital One. Perhaps it is Asset Acceptance, Midland or Portfolio Recovery Services. These companies are debt buyers. Unlike an original creditor who has risk in the game, a debt buyer has almost nothing to lose by aggressively trying to collect.

If you're hearing from a debt buyer, Capital One or FIA or Discover sold your old (alleged) debt for as little as pennies on the dollar to a debt buyer, and now that debt buyer may be calling you, demanding payment, or perhaps they've already sued you in state district or superior court. Debt buyers frequently bring these lawsuits with no admissible evidence of a debt.

What if grandma dies and leaves you some money, and suddenly you have the ability to pay off your account and bring it current with one payment? You see several things on your credit report. One, your credit card. Two, some other company. Three, another company you've never heard of. Is this "shell game" designed to prevent you from paying off the account, because you have no idea where on earth to send the check? Do you ever wonder if this is by design, so that these businesses can artificially keep you unable to pay, so that they can make more fees and interest off of you before they ultimately sue you?

And what if they have sued you? The name of the original creditor may appear on the complaint, but suppose then the credit card company submits an affidavit that says they charged off and sold the same debt they are still collecting…or they bought it from some other debt buyer, who bought it from another debt buyer. There could be some missing links in the documentation of how the current collector got its hands on an account it says is yours — that's what we call the "chain of title."

Some people are even being hounded by two or more debt buyers at a time who both claim to rightfully own the same debt! That's wrong.

I believe that these "shell games" are the very business practices Congress intended the FDCPA to prevent, and that the Washington State Legislature intended to prevent and remedy when it passed the Consumer Protection Act and the Collection Agency Act.

If you are losing your marbles over dealing with credit cards, charge-offs and debt buyers, and need legal advice in Washington state, contact me, SaraEllen Hutchison, for an evaluation of your situation: 888-339-3942.

I am a member of NACA, the National Association of Consumer Advocates.