In a series of 2009 and 2010 transactions, Bank of America sold credit card receivables to an outfit called CACH LLC, based in Denver. Co. Each month CACH bought debts with a face value of as much as $65 million for 1.8 cents on the dollar.
The pricing reflected the accounts’ questionable quality, but what is notable is that the bank could get anything at all for them. B of A was not making “any representations, warranties, promises, covenants, agreements, or guaranties of any kind or character whatsoever” about the accuracy or completeness of the debts’ records (emphasis mine), according to a 2010 credit card sales agreement submitted to a California state court in a civil suit involving debt that B of A had sold to CACH.
Collectors’ responsibilities aside, other banks’ sales agreements suggest Bank of America’s standards are emblematic of wider industry practice that raises risk management concerns. For less than $1.2 million a month — a rounding error on B of A’s income statement — the company sold CACH accounts that raise regulatory and reputational questions about the accuracy of its records and its disclosures to courts.
The tide is beginning to shift.
The Consumer Financial Protection Bureau will start their audits of the largest collection agencies this month. They will begin to make sure all the necessary documentation is in place at these firms before they can pursue lawsuits and stamp out the “robo-signing” and “robo-suing” that has become rampid in this industry.
Debt collection is big business. It’s unfortunate, but sometimes bad things happen to good people. People have a moral and ethical obligation to pay their debts but they deserve to be treated with the dignity and respect they deserve and the CFPB is going to make every effort to ensure this is the case going forward.
Do Good and Make Money!