The largest U.S. banks face a multi-state investigation into whether they helped debt collectors pursue faulty judgments against credit card customers, according to people familiar with the matter.
At issue is whether weak record-keeping by banks or a failure to pass accurate information to collection agencies harmed consumers.
While the banks are not themselves pursuing the questionable judgments on credit card debt, they could be liable for aiding and abetting the practice by providing information they cannot confirm as accurate.
The allegations against the banks echo those central to last year’s $25 billion federal-state mortgage settlement to resolve charges that the banks “robo-signed” documents and pursued foreclosures with faulty information.
Documentation requirements, especially information provided to debt buyers when accounts are exchanged, have been a top priority on the state regulatory level for years.
Attorneys’ General are chomping at the bit for another billion dollar payday and the collection industry is likely their next target as hundreds of thousands of people were potentially harmed by the lack of information in the hands of debt collectors.
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