BofA Class Action Filed Over Debt Collection Practices

Bank of America has been hit with a potential class action lawsuit in Pennsylvania federal court alleging that it has been improperly suing consumers who have credit card debt. The debt in question had previously been sold and BofA allegedly relinquished ownership interest yet pursued litigation, according to allegations in the claim.

Plaintiff G. Veronica Willard accused BofA of violating numerous federal and state laws, including the Fair Debt Collection Practices Act, by suing consumers to collect debt that it no longer owned as a result of its previous sale. Willard said the bank won a judgment against her in court last month for her unpaid debt.

According to Willard, the debt in question had been sold and purchased a number of times, and after numerous transactions, the debt was eventually purchased by Wilmington Trust Co., a company that began buying debt from BofA in 2009 and selling the debt onto the bond market. Willard claims that because BofA didn’t require Wilmington to terminate the lien on her debt, the bank relinquished its ability to collect the debt through litigation.

“Despite the fact that Bank of America intentionally relinquished its beneficial interest in Bank of America accounts, it has continued to pursue, along with its affiliates and the defendant law firms, collection lawsuits against plaintiffs and members of the class to recover the obligations allegedly owed on the Bank of America accounts,” Willard asserted in her claim. “The failure of Bank of America to demand Wilmington Trust file a termination statement makes any lawsuit Bank of America files illegal because they are not the real party in interest.”

Willard claims that BofA participated in this alleged scheme since at least October 2006, despite BofA selling its interest in affected consumers’ credit card debt in an attempt at credit card securitization. Willard claims that since BofA had given up its interest in the debt, it had also given up its right to sue potential Class Members when they defaulted on their debt.

As part of its sale of debt, BofA is the only one that can demand a lien be released by the other party to the sale, Willard claims. BofA allegedly said in the past that it is justified in the debt collection practice because the account is separate from the receivable. Willard alleges that BofA’s assertion is untrue because debt from a credit card loan is different from a home loan or car loan.

In the case of a car or home loan, Willard said there is collateral that can be taken in the case of a loan default. However, with loans arising from credit card debt, the receivables are the account, and without the receiveables, no account exists, according to Willard.

“Any distinction that defendants make with respect to ‘account ownership’ vs. ‘receivable ownership’ is a red herring and must be ignored by this court,” Willard said.

The proposed Class would include all U.S. residents who have been sued by Bank of America in an effort to collect BofA credit card debt that had already been sold in the absence of issuing a termination statement. In addition to a nationwide class, Willard also seeks to represent a subclass of Pennsylvania residents.

Willard is represented by Christopher Jay Evarts, Esq.

The BofA Debt Collection Class Action Lawsuit is Willard v. Bank of America, et al., Case No. 2:16-cv-01199, in the U.S. District Court for the Eastern District of Pennsylvania.