A number of judges have said that credit card companies are suing customers over debts using inaccurate documents and not following proper collections procedures. The judges say that in some cases, companies are trying to collect debts that have already been paid off.
From the New York Times:
Lenders, the judges said, are churning out lawsuits without regard for accuracy, and improperly collecting debts from consumers. The concerns echo a recent abuse in the foreclosure system, a practice known as robo-signing in which banks produced similar documents for different homeowners and did not review them.
These kinds of lawsuits may reap some short-term gain for the lenders, but if the judges’ assessments are accurate, the long-term risks are not worth the rewards. First, a loss of consumer trust will push more cardholders away from using credit and towards alternate forms of payment. Second, good, long-term customers can be lost as they fear that what has happened to their friends and family will happen to them personally. Third, the lawsuits may bring class-action counter suits and increased regulations.
Click here to read more from the New York Times.
