Minnesota Attorney General Lori Swanson announced Wednesday that her office has filed a lawsuit against a debt buyer that specialized in demand deposit accounts (DDA). Swanson alleges that the company illegally charged interest to consumers after the accounts were purchased.
Swanson’s case against Minnesota-based Bradstreet & Associates, and its predecessor Bridgestone and Associates, claims that the firm charged up to 21.75 percent annual interest on old demand deposit account overdraft debt that originated with Wells Fargo and US Bank. Both Wells Fargo and US Bank charged their customers fees, but not interest, on overdrawn checking accounts, and contracts with their customers did not allow interest to be charged on overdrawn funds or the associated fees.
In some cases, Bradstreet got courts to enter judgments against unrepresented people at the full 21.75 percent rate of interest, even though the underlying bank contracts did not allow it. In 2013, the Minnesota Legislature—at the urging of the Attorney General—enacted a law to require debt buyers seeking default judgments in court to substantiate through admissible evidence that they are suing the right person for the right amount. The law became effective on September 1, 2013.
Attorney General Swanson commented, “We will watch to see if the new law deters debt buyers from asking courts to award default judgments against unrepresented people with scant, incorrect, or manufactured evidence.”
The case announced Wednesday is related to one announced a couple of months ago by Swanson. The AG went after United Credit Recovery in late October over DDA accounts purchased from Well Fargo, US Bank, and others.
Although UCR was not mentioned in yesterday’s announcement, Bradstreet was mentioned in the lawsuit filed against UCR in October. That suit was over robo-signed affidavits used in debt collection suits. UCR apparently resold many of their DDA accounts to Bradstreet.
In December, another state AG announced his own action against UCR. Colorado Attorney General John Suthers filed a suit against UCR also over the company’s affidavits.