Transworld Systems bills itself as a "collection system redefined" but it looks more like collection agency abuse on steroids. The company has filed over 38,000 lawsuits in just three years on behalf on just one client, the National Collegiate Student Loan Trusts (NCSLT), the agency responsible for student loans. Suits have been filed against borrowers who have fully paid off their loan or against borrowers in which NCSLT was not a creditor. As the CFPB noted when it fined Transworld and its counterpart National Collegiate, the companies "sued consumers for student loans they couldn’t prove were owed and filed false and misleading affidavits in courts across the country." Using the same tactics as the banks with mortgage foreclosures, Transworld used an assembly line method to crank out these suits without doing any research into the loans and falsely affirming that its employees had "personal knowledge of the business records" when they really had no such thing. The multitude of false statements in these suits are legion with Transworld sometimes claiming to have purchased the loan for collection years before the actual loan was made.
The CFPB fined both Transworld and National Collegiate a combined $21 million and reached an agreement where both companies would agree to cease any new collections and suspend collections where judgements have already been rendered until they audited the paperwork provided for every one of the 800,000 loans that have already processed. But Transworld is now doing its best to try and back out of that agreement and, until the agreement is finalized, Transworld will continue with business as usual.
TIAA's fraud is more traditional, although it violates the perception that TIAA's sales force are employed in a commission and conflict-free environment. Essentially, TIAA's sales force was pushing clients into products that may not have been appropriate but that also generated higher fees for the firm. As usual, the sales force was working under seemingly unrealistic quotas and was apparently instructed to prey on clients' fears about not having enough money for retirement. This fraudulent activity has prompted an inquiry from New York Attorney General Eric Schneiderman. The ironic part of this is that TIAA was an early supporter of the now delayed fiduciary rule that would require financial advisors to always act in the client's best interest because it primarily offered low-cost funds.
We have seen this fraud over and over again, at Wells Fargo and JP Morgan, for example. It will apparently continue unabated as the Trump administration has decided to "postpone" the implementation of the fiduciary rule until the middle of 2019. So financial firms can be secure in knowing that they can engage in business as usual at least until then.
And, as far as Transworld is concerned, business continues as usual as well. Is there any doubt that if an individual sued thousands of businesses with fraudulent evidence, that person would be accused of vexatious litigation and be sanctioned by the courts. In addition, that person's lawyer could be disbarred for participating in the action. Those rules somehow do not apply when the situations are reversed. Of course, no one can even test that equivalence because individuals aren't even allowed to sue financial firms like TIAA because they are legally forced into arbitration when they open an account.
No comments:
Post a Comment