In 2011 Encore Capital Group rolled out a "Consumer Bill of Rights"
that was touted as an effort to "
set the industry standard for consumer conduct." Per the linked press release, Encore is the nation's largest
publicaly-traded debt buyer. It purchases debts that have been charged
off by banks -- these debts are generally credit card debts.
The Consumer Bill of Rights is supposed to be the document that guides
the conduct of Encore's collectors. It also claims to create several
levels of account information validation. However, this validation is
based moreso on finding the consumer and collecting money (or determining
that the consumer is uncollectable), not on making sure that the debt
is properly documented.
The only mention of proper documentation comes in Article 5 of the document:
We will not resell accounts to third parties in the ordinary course of
our business. In the future, if we have an occasional instance when we
do resell accounts, we will only do so when we can provide the purchaser
with documentation evidencing the amount owed on the account and clear
title of ownership.
The majority of what is promised in the document is what Encore should
already be doing -- making sure that its debt collectors comply with the
law. The document suddenly veers towards being laughable in Article 6
-- Encore's commitment to the "fair and reasonable use of litigation."
Some of the company's commitments fly in the face of what is common
practice in debt collector/debt buyer lawsuits. For example, "we
will not pursue litigation . . . on accounts where we are not the rightful
owner, and we will require our attorneys and law firms to provide proof
of such ownership when requested by a court."
This clause contains some fantastic weasel language. "Rightful owner"
is a pretty loaded concept -- these kinds of debts are really a bundle
of rights. In Illinois, a credit card account involves both legal and
equitable interests in the credit card account. The burden of proof for
a debt buyer to be the rightful owner of an account is different than
the burden of proof for a debt collector. Whether an entity is the "rightful"
owner of a debt may vary from state-to-state and case-to-case. In any
event, there is enough grey area that this promise means very little.
Additionally, any promises made in Article 6 with regard to attorney conduct
are also empty promises. Encore cannot truly control the attorneys that
it hires -- it can merely stop working with a firm that does not comply
with its wishes. Moreover, some of the promises made by Encore in 2011
were called into question in 2012.
In particular, the portion of Article 6 that addresses the robo-signing
of affidavits is not being followed
according to the Attorney General of West Virginia. In March of 2012, West Virginia sued Encore's subsidiary corporations
alleging that the company frequently files lawsuits based on inaccurate
or unverified affidavits. If proven to be true, then it would demonstrate
that Encore is not following the rules that it established for itself.
It would also expose another bit of weasel language in that promise --
"our authorized representatives will read, understand, and fully
verify document contents as appropriate to ensure accuracy." There
is nothing in this promise that addresses the accuracy of the account
records used to prepare hte affidavit. An authorized representative could
read and understand the contents of a document -- that person could even
verify the data against the information in the debt buyer's possession
-- but there is never a verification of the underlying data. This is the
heart of the complaints against the debt buyers -- they cannot prove that
a debt is owed or that they are the true owner of that debt.
This Consumer Bill of Rights is a great idea -- debt collectors and debt
buyers should operate within the law and respect the rights of consumers.
Unfortunately, in my experience, the reality is that the debt buying industry
is inherently flawed -- debt buyers simply cannot prove ownership of the
debts that they purchase. All of the ethical behavior in the world cannot
redeem that basic flaw in the system.