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Unifund CCR Partners v. Shah

Illinois Court Upholds Debtor Protections

    

An appeals court agreed with AARP that debt buyers must produce actual contracts rather than rely on affidavits about those contracts.

Background


In 2011, an Illinois appellate court ruled that debt buyers must produce the purchase and sales contracts for debts they sought to collect. The issue returned to the appeals court on a motion for rehearing regarding whether the debt buyer could use an affidavit rather than produce the actual contract.  Debt collectors regularly seek to collect judicially on billions of dollars worth of debt purchased from banks and other debt buyers for an average price of four cents on the dollar. The debt buying industry has developed a highly criticized and problematic business model used to purchase debt portfolios for accounts that are considered essentially worthless, based on information that even the creditor banks acknowledge is unreliable.

Under that business model debt buyers file hundreds of thousands of lawsuits each year in state courts, often based upon “robo-signed” affidavits – sworn statements claiming the debt buyer has reviewed the account information and that it is true, accurate, and reliable. As it turns out, these affidavits are signed so fast (one every 13 seconds by one account) that it would be impossible for anyone to have reviewed the information asserted.

Moreover, the account information claimed to be verified typically does not exist. Debt buyers only have access to an electronic spreadsheet containing a brief summary of information gleaned from millions of accounts. The sales contracts used by the banks to sell debt portfolios specifically disclaim all warranties as to the accuracy of the summary information the debt buyer has purchased. Banks have been known to sell accounts that resulted from identity theft, have already been paid off, or have been disputed, even though none of that debt is collectible.

AARP’s friend-of-the-court brief was filed by AARP Foundation Litigation attorneys, in conjunction with two other consumer advocacy groups. The brief pointed out the dangers of robo-signed affidavits which have become a “nationwide epidemic that threatens the financial security and well-being of alleged debtors and impugns the integrity of the courts.” The brief reviewed the reports documenting debt buyer robo-signing practices and the problems with the underlying bank and account data.

The court agreed that the debt collector could not proceed on the scant evidence it had, though the ruling was based more on the adequacy of the evidence before the appeals court. This is a win for debtors.

What’s at Stake


Collection abuses force already struggling people to pay money they do not owe, ruin credit ratings and reputations, and needlessly cause emotional distress. A judgment may make it hard to get a job or rent an apartment. All debt buyers must show courts that they own the debt, are suing the right persons for the right amount, and using the actual contracts.

Case Status

Unifund CCR Partners v. Shah was decided by a state appeals court in Illinois.

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Our legal advocacy initiatives  - conducted by AARP Foundation Litigation (AFL) - reflect more than 15 years of work in federal and state courts across the country. Through our efforts, we support the Foundation’s four priority areas: Hunger, Income, Housing and Isolation, and ensure that those 50 and older have a voice in the laws and policies that affect their daily lives.