I am presently preparing a case for one of my clients who has basically been the victim of multiple violations of the Fair Credit Reporting Act and the Fair Debt Collection Practices Act. This saga started in 2003 when she purchased furniture from a well known furniture retailer. The retailer used GE Money as its credit card servicing agent and still does. The purchase occurred in April, 2003 and the furniture was delivered approximately 4 weeks later.
For purposes of privacy I will refer to my client as Jane. On the date of delivery Jane discovered that the order was incomplete and refused to let the delivery people unload the furniture from the delivery truck. The items were brought back to the retailer’s warehouse. The next month Jane received a bill from GE Money. She called the retailer and asked then why this matter was still pending. She was told not to worry about it and that it would be taken care of.
For two years after the furniture was returned GE Money continued to bill Jane. Finally in August of 2005 Jane was told by a customer service representative that the furniture retailer had paid $2433.15 to GE Money which was the entire amount due to GE Money. Jane assumed at that point that the matter was closed. WRONG
On July 27, 2006, Jane received a letter from her bank stating that “A Bank Execution in your name(s) was served on XYZ Bank”. You are probably asking yourself “What is going on here?” aren’t you? That is what I said to myself when I started reading the paperwork that Jane gave to me.
It took me some days to piece together the pieces of this puzzle. Here is what I came up with. The furniture company acted in good faith and did pay GE the balance in the account. The problem is that GE never credited Jane’s account but instead kept charging the account interest. It turns out that GE sold what they considered to be a receivable to a third party debt collector who proceeded to do what many 3rd party debt collectors do to make their money–sue Jane to get a default judgment. Here is where it gets juicy.
Unfortunately for Jane, she never knew that GE sold her account. She also never knew she was sued. It turns out that the 3rd party debt collector sued her not in her state of residence but in some other state. Jane was never served with a summons and complaint. The debt collector obtained a default judgment which was easy since Jane did not appear. Convenient, wasn’t it? The default judgment was given to a collection law firm in CT to execute. They requested a bank execution in CT superior CT and it was granted. Mind you, all the while poor Jane had no clue any of these things were happening to her.
There are quite a few issues here which will probably be decided in a court of law. GE Money reported Jane’s account as “charged off” to the credit bureaus. We know that this is not true. Here is the first violation of the FCRA. How can you report an account as a charge off or past due when the consumer never owed any money to begin with?
The second issue is that the furniture company informed Jane that the matter was closed and that they had paid the appropriate amount to GE. Apparently GE and the furniture company did not have clear lines of communication. GE sold Jane’s account to a 3rd party debt collector. They made the representation to the debt collector that Jane’s account was a good receivable and was collectible. Not so.
There is the issue here that Jane was never served a summons and complaint by the party who bought her account from GE. To me it would appear that the default judgment was obtained under questionable circumstances. That is being polite. Then there is the bank execution. In my opinion this represents a theft of funds from Jane’s bank account. I think the attorney who is presented with this file is going to have field day.
There is a teachable lesson in all of this which I think may be somewhat clear to you. You cannot assume anything or trust anyone to take care of your financial affairs for you. You have to have your hand on the wheel and check to be sure that what people say they have done is really done. As Ronald Reagan said, “Trust but verify.”. “Trust but verify” also means periodically checking all three of your credit reports.
