Robo-signing is over. But robo-suing is growing.

A small group of debt collectors are robo-suing people who default on their credit cards. Now, state and federal authorities are cracking down.

Elise Amendola/AP/File
Consumer credit cards are posed in North Andover, Mass., in 2012. Using a practice called robo-suing, a small group of companies is buying credit-card debt in default and suing thousands of consumers a day to try to get them to pay up.

Remember the term “robo-signing”? You know: what all the mortgage companies were doing a couple of years ago when they kicked people out of their homes without following the process of law. Did you know that robo-signing is still happening tens of thousands of times every day?

Most people don’t know. But it is true. This time, it involves buyers of credit-card debt who are robo-suing. Every day, about a dozen of these companies take this procedural shortcut by filing lawsuits to try to use the courts to force people into paying back the debt they've defaulted on. These suits have no true legal standing because they violate the most basic principle of the burden of legal proof. That's because the robo-signers, signing hundreds or thousands of documents a day, don't take the time to check whether the people they're suing really owe those debts. These credit-card debt buyers have done this about 40 million times since the financial crisis began in 2008. And they will do it again over and over – about 10 million times a year.

How did robo-suing start in the credit-card industry?

For the past 20 years the major banks who issue credit cards sell the accounts that are defaulted on. This makes perfect sense for the bank because it frees up time and resources that are better spent growing the bank. No bank wants to do business with third parties who trick and abuse consumers in the manner that this small group of corporate debt-buyers has done. Doing so reflects badly on the bank and creates financial risk. So, why did the banks go along with this plan? For the simple reason that they did not know about it.

The volume of these robo-signed lawsuits are so dispersed in the 15,000 county and small claims courts across the nation that it has been almost impossible to see the magnitude of what was happening. Those courts are so overburdened that court officials just don’t have the time, manpower, or energy to make it stop.

Consumer advocates, such as the Center for Consumer Recovery, began to notice in 2010. Along with other consumer advocates, the center has worked hard to bring the abuse to the attention of the Consumer Financial Protection Board (CFPB), the Office of the Comptroller of the Currency, and state attorneys general.

The situation is beginning to change quickly. Working independently but in a coordinated manner, three regulators have begun a push to end the practice of debt-buyer robo-signing. Tom Miller, attorney general of Iowa, Richard Cordray, director of the CFPB, and Thomas Curry, Comptroller of the Currency have each in the past weeks fired warning shots at that small group of corporate debt-buyers.

Attorney General Miller is putting together a consortium of other state attorneys general and is pursuing litigation. Messrs. Cordray and Curry have issued official public statements warning of dire consequences for harming a consumer.

This issue affects the lives of millions of Americans. “The wholesale transgressions of the debt collection industry presents the most significant consumer protection issue of the decade,” former Oklahoma Attorney General Drew Edmondson said at a National Association of Attorneys General meeting in July 2013. It's high time to reign in these bad practices.

– Bill Bartmann is CEO of CFS II, a debt-collection company in TulsaOkla., and has helped to settle the debts of more than 4.5 million people without ever filing suit against a customer.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to Robo-signing is over. But robo-suing is growing.
Read this article in
QR Code to Subscription page
Start your subscription today