RebelCapitalist: Financial Information for the Rest of Us | Does Bank of America Violate Federal Law?

Does Bank of America Violate Federal Law?

Feb 06, 2009 | By: Mr_Blue | Tags: fair debt collection practices act, bank of america, debt collection

The federal law is Fair Debt Collection Practices Act. This story on TPMMuckraker raises some interesting legal questions for Bank of America. The son of the late Theresa Hatt was notifying Bank of America that his mother had died. Mrs. Hatt had a Bank of America credit card that had a balance on it at the time of her death. What transpired on the telephone conversation is sad and possibly illegal. Mrs. Hatt’s son was not fooled by the misleading statements but how many other people may have been tricked by Bank of America into paying the debts of deceased love ones.

Here is a summary of the conversation:

Link

Paul Kelleher: Yes, I’m calling to inform you that my mom died on the 24th of January.

Bank of America Estates representative: I’m sorry. Oh, it looks like she never even missed a payment. That’s too bad. Well, how are you planning to take care of her balance?

PK: I’m not going to. She has no estate to speak of, but you should feel free to just go through the standard probate procedure. I’m certainly not legally obligated to pay for her.

BOA: You mean you’re not going to help her out?

PK: I wouldn’t be helping her out—she’s dead. I’d be helping you out.

BOA: Oh, that’s really not the way to look at it. I know that if it were my mother, I’d pay it. That’s why we’re in the banking crisis we’re in: banks having to write off defaulted loans.

The Fair Debt Collection Practices Act main purpose is to protect consumers against abusive and deceptive practices often instituted by debt collectors. The Act creates guidelines for debt collectors and defines rights of consumers involved with debt collectors.

The relevant portion of Section 807 of the FDCPA (15 USC 1692) reads as follows:

A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection
of any debt.

Obviously, trying to blame the current economic crisis on people like Mrs. Hatt is absolutely asinine. But what is also disturbing is that the customer service rep. may have tried to mislead Mrs. Hatt’s son into believing he was legally obligated to pay the debt of his deceased mother:

Bank of America Estates representative: I’m sorry. Oh, it looks like she never even missed a payment. That’s too bad. Well, how are you planning to take care of her balance?

Mrs. Hatt’s son didn’t fall victim to Bank of America’s shenanigans but how many other people may have been fooled into paying the debts of deceased love ones? It appears from the TPMMuckraker story that customer service reps. may have been incentivized to mislead people which makes this story even more heinous. Maybe, Congress, the Federal Trade Commission and class action attorneys should like into the debt collection practices of Bank of America. Wait a minute - since the taxpayers are part owners of Bank of America, in the case of Congress and the Federal Trade Commission it should be a priority to investigate Bank of America’s debt collection practices.