Robo-signing moves to credit cards

First came mortgages. Now, courts are ruling against credit card issuers for sloppy paperwork or lack of proof when they sue alleged deadbeats.

Kai Ryssdal: You know the phrase robo-signing, yes? In the contest of mortgages probably, banks signing off on foreclosure documents fast and loose, and by the thousands, too.

Now it seems questionable documentation might just be part of the story. The New York Times today quoted a judge as saying there are flaws in roughly 90 percent of the cases he's heard about credit card debt. Our senior business correspondent Bob Moon has Money Matters this week, our regular segment about the news affecting our bottom lines.


Bob Moon: Judges have been inclined to accept testimony and documentation from credit card lenders without much of a challenge, but lately they've become more and more suspicious. So says New York-based consumer attorney Brian Bromberg. He used to shy away from representing borrowers sued by credit card companies, but lately he's become more willing to take such cases on.

Brian Bromberg: What we're finding more and more is, once you start taking depositions of the people who are signing off on the original documents, they know nothing.

Bromberg says courts have been swamped with credit card collection lawsuits, leaving judges and their clerks with little time to double-check the paperwork. But he says courts across the country have begun to demand stronger evidence.

Harry Walsh is a Superior Court judge in California's Ventura County.

Harry Walsh: I don't think that the banks fully prepare the cases subject to evidentiary rules and requirements when they come to court with them.

Walsh recalls one recent case in which he refused to accept the testimony of a bank officer, and dismissed the lawsuit.

Walsh: That person was saying little more than the fact that, I work for a bank and these are our records and these are what they show. Well, I mean, anybody could see that.

Walsh says he dismissed the lawsuit for lack of evidence, even though the defendant may really have owed the money.

Consumer advocates claim many such lawsuits go beyond sloppy record-keeping, and border on outright fraud. Consumers Union attorney Suzanne Martindale says she's seen affidavits supposedly signed by the same person, with what look like 10 different signatures.

Suzanne Martindale: So really there's probably someone in a backroom somewhere who's signing a bunch of affidavits, not really looking at the original paperwork to make sure that you've got a valid debt.

Two major card issuers we sought comment from, Citibank and American Express, emailed statements saying they have strong policies in place to ensure accuracy.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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