Debt Buying Contracts, Bank of America Now Focus of Magazine Reporting

American Banker late Thursday published another article in a series focused on the relationship between major credit card issuers and the debt buying and collection industry. The newest piece drags Bank of America into the fray and questions language used in debt portfolio sales contracts.

In the feature length story, “Bank of America Sold Card Debts to Collectors Despite Faulty Records,” the magazine asserts that some language included in contracts between debt sellers and buyers calls into question the accuracy of the accounts in the first place, especially when the buyer moves to sue for recovery.

The piece focuses on a particular line in the contract between B of A and a debt buyer that was entered into evidence in a suit brought by a consumer against the buyer.  Since B of A says in the contract it cannot make “any representations, warranties, promises, covenants, agreements, or guaranties of any kind or character whatsoever” to the accuracy of the records it is selling, the information passed on about the accounts should be treated as untrustworthy, according to the article.

The story makes a similar argument that many debt collection agencies and debt purchasers have made for years: any problems with documentation and account verification lay at the feet of original creditors.

Indeed, the article contained a quote from ACA International along those lines.

But by focusing on very narrow language – that may be construed as a legal liability disclaimer on the part of the banks – the article questions the very nature of the relationship between original creditor debt sellers and the buyers in the ARM market.

So much information was uncovered in the investigation that American Banker published another piece Thursday focusing on one consumer’s experience with a Bank of America credit card debt that had been sold into the ARM market (“Borrower Beware: B of A Customer Repaid Her Bill Yet Faced a Collections Nightmare”).

The main B of A piece, while focusing on many of the same themes, does not appear to be a part of a series comprised of two previous articles on JP Morgan Chase and their debt sales operation.