Dodgy Debt Collectors Strike Again!

Dodgy Debt Collectors

Dodgy Debt Collectors

A news story from Minnesota has once again highlighted some of the dodgy practices undertaken by less scrupulous debt collectors! Minnesota State Attorney General Lori Swanson has sued a debt collection firm for illegally collecting on debts which had already been sold by the debt holders Wells Fargo an U.S. Bancorp.

The debt collectors, Bradstreet & Associates LLC, were allegedly pursuing debts from 22 account holders over the past few years. A great deal of the debt was apparently from account fees according to the Attorney General.

The debt collector reportedly bought $18 million worth of overdraft fees from the 2 banks, starting in 2009. The debt collectors then began harassing people to collect on those overdraft fees despite the actual debt from the accounts had been sold by the bank to another party.

The debt collectors started filing law suits to illegally reclaim interest on the accounts, which saw some debts accumulate from $1800 to as much as $4000.

A small amount of debt on the accounts from overdraft fees would quickly balloon into a large amount of debt when a high interest rate was applied. The AG called the fees a “wholesale imposition of the wrong amount of money.”

The banks have now stopped selling the checking account overdraft debt to third parties.

The debt collectors were allegedly charging up to 22% on the debt from the date that the accounts were charged. Some of the accounts were 5, or 6 years old so the debt quickly grew. The state has a capped 6% rate for this kind of debt, so the actions by the debt collectors were inappropriate, according to the Attorney General.

Additionally the bank accounts did not have the permission to charge consumers any interest on account overdrafts, let alone charging 20%!

Just another reason to be extremely cautious before paying any money to debt collectors. The more unscrupulous operators have been trying to take advantage of consumers in the post GFC world. When you receive a notice from a debt collector, make sure that the debt is a legitimate one and if you are unsure, you can contact your lawyer or the industry ombudsman in your state.

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One Comment on “Dodgy Debt Collectors Strike Again!”

  • […] and that figure is quickly growing. Many debt collection agencies have recently been busted for deceptive and illegal practices (here also), so the advocacy group is interested in finding out which companies are involved and […]

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