Problems riddle suits to collect credit card debt

The same problems that plagued the foreclosure process—and prompted a multibillion-dollar settlement with big banks—are now emerging in the debt collection practices of credit card companies, says a New York Times report. As they work through a glut of bad loans, companies like American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases. Lenders, the judges say, are churning out lawsuits without regard for accuracy and improperly collecting debts from consumers. The concerns echo those pertaining to a recently revealed 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. “I would say that roughly 90% of the credit card lawsuits are flawed and can’t prove the person owes the debt,” says Noach Dear, a state civil court judge in New York who presides over as many as 100 such cases a day. Read the full story here.