Credit Card Arbitration

[Prof]

As I may have mentioned, I infrequently handle credit card arbitrations for one of the large arbitration firms. (Usually, the firm sends me ICANN domain name arbitrations, which are interesting, even challenging.) I received a new credit card file this week, and unlike most arbitrations, the Respondent attempted to defend against the claim. Respondent asserted that he was entitled to copies of the original credit card application under the terms of which he agreed to arbitration; he also asserted that he was entitled to "verification" of the debt. Attached were about 150 pages of case law allegedly dealing with these issues.

Of course, there were a couple of missing elements:

The Respondent ignored the Creditor's filing, which recited the amount of the debt and the existance of the account, and contained the portion of the card-holder agreement which referenced arbitration under Deleware law.

So, while the Respondent demanded documents and evidence of debt, he did not bother to deny that the Creditor's pleadings were in error or otherwise wrong.

What a waste of paper!

I presume someone is selling these packages on the 'Net. So, for those of you who are into "debt elimination," and who lurk here, let this case be a lesson.

If you cannot deny that you signed the agreement and cannot deny that you signed an agreement with an arbititration clause, don't bother with the "demand" for further evidence.

And, if you cannot deny the debt, or at least object to the accurancy of the claimed amounts, don't bother to ask for verification of the debt.

FN. The usual Response to credit card claims received by me (I can only speak anecdotally) is not a denial but a statement that the debtor simply cannot pay for reasons that include health, job loss, etc. Very few "deny" the debt. This is why, of course, that 99% of the credit card arbitrations go in favor of the creditor.

[Nikki]

The 'Validation of Debt' and 'Original Wet-Ink Contract' theories are available for FREE at defunct-Sooey, Son-Of-Sooey, and hundreds of other sites.

They are also available for sale, complete with fill-in-the-blank templates, at hundreds of other sites.

Every one of these sites provides long lists of anecdotal supporters for their methods. Unfortunately, it's never possible to verify the successes of George B. from Mississippi or any of his thousands of victorious friends.

[Judge Roy Bean]

The latest incarnation of the DE scams is a take on a novation strategy. One Brad Daley offers to assume credit card debt via assignment (for about $2,500) to his "Court Mediation Services" entity with a LPOA. A few minimum payments are then sent to CMS and they formally notify the bank and send those in. Allegedly, the original debtor no longer owes the debt and CMS forces the bank into negotiating a tiny settlement because the creditor violated the terms of the new agreement that was foisted on them via accepting the payment. Of course, this process takes months - several, in which the rubes are all so excited that the phone calls have stopped that they really believe they won't be sued for collection of the debt.

Obviously, Daley is counting on the bank not actually suing - given the right amount of debt and the resources that could be collected, there are probably thousands of people who could walk away without the risk of being sued.

[ErsatzAnatchist]

The real potential defense in these cases is when the creditor asserting arbitration is not the original creditor and cannot provide adequate evidence of the assignment. In a few cases, the defense may be "I am not the same person who signed the agreement (same name, wrong person)" or a forged signature. There may even be a Statute of Limitations defense (NH has an odd SOL tolling rule that the SOL only gets tolled as to debtors who make payments, so personal guarantors may have an SOL defense when the original debtor did not).

Since my practice primarily revolves around debtor representation (when I am not coordinating world domination by the Jesuits), I find that very few of my clients who are being sued even dispute the debt (although many complain about the interest rate & fees).

[fortinbras]

The Validation of Debt (VOD) business seems to be the current bilge being pumped by/for people who never intend to pay their credit card debt. They also quibble when a receiver - other than the original credit card company - takes them to court, notwithstanding that the original credit card company got stonewalled when it tried to collect.

Their original credit card applications undoubtedly contain some language authorizing the original company to assign their debts to someone else as the occasion arises (i.e., bundling and selling credit card debts to a collection agency).

They also want VOD - the documentation of each and every little credit card expenditure - by which they mean every signed cash register receipt. This is a stalling tactic to nickle-and-dime the creditor further with this very tedious responsibility. Courts have so far been willing to accept the creditor's computerized listing of purchases, and limit this verification only to those transactions explicitly denied by the debtor. And if the debtor is denying plainly genuine debts, woe betide him for wasting everyone's time and energy.