In my post of February 29, I discussed a “new” variation on the debt elimination scam I’ve frequently written about in various blog posts and articles. I put “new” in quotes because it’s not new at all.
The basic idea is that the debt “expert” takes over the debt from you and becomes responsible for it after that point, leaving you free of worry since the debt is no longer yours. One company has been aggressively promoting this bogus tactic through a network marketing organization.
Now, another con artist has started to employ the same technique. This particular individual has been involved in a long-running credit repair scam in the guise of a consumer advocacy program. He claimed to have an inside contact at the Federal Trade Commission, and that he was working closely with the government to have thousands of consumer debts declared “invalid.” I guess his customers got tired of waiting for non-existent results, so now he has changed the game and is using the assignment tactic.
Here’s a direct quote from this scammer’s documentation:
“Be it duly noted that pursuant to Title 42 United States Code, Section 1981(b), et al., You (Original Creditor) are hereby notified that I have assigned/transferred all of the rights, benefits and liabilities of our agreement along with the administration and servicing of the aforementioned debt, if any, from the original creditor to the following third party:”
(I’ll ignore the fact that this is badly worded even in the context of what it’s trying to accomplish, since this paragraph does not even clearly state that the intent is to transfer the responsibilities of the *debtor* to a new third party debtor.)
He also states: “For case law please review, Hale v. Henkel, 201 US 43 (1906).”
Let’s have a look first at Title 42 of the US Code, Section 1981. You can look up the exact language online, but the gist is simple enough. The original purpose of this code section was to ensure that everyone has the right to make and enforce contracts without regard to their skin color. It was an anti-discrimination measure. So all Americans have the right to make and enforce contracts. So far, so good. But the credit card agreement you signed represents an EXISTING contractual obligation that you already entered into. You already exercised your right under Section 1981 when you accepted the terms of the credit card agreement by actually using the card for purchases. Section 1981(b) of the US Code does nothing to overturn or negate existing contractual obligations. So this is just a bit of “smoke and mirrors” on the part of the scammer, who is citing US Code to make his document look more official.
Now, what about Hale v. Henkel, 201 US 43 (1906)? More smoke and mirrors. The case overview indicates the following as the substance of the case matter:
“Under the practice in this country, the examination of witnesses by a Federal grand jury need not be preceded by a presentment or formal indictment, but the grand jury may proceed, either upon their own knowledge or upon examination of witnesses, to inquire whether a crime cognizable by the court has been committed, and, if so, they may indict upon such evidence.”
OK, so what? What does this have to do with assignment of debt? Exactly NOTHING. In other words, the assignment document this scammer is using is roughly equivalent in legal value to a piece of toilet tissue.
Next, let’s have a look at typical language included in a credit card agreement, as it pertains to assignment. Here is an actual excerpt from one major bank’s agreement:
“We may at any time, and without notice to you, sell, assign or transfer any sums due on the Account, this Agreement, or our rights or obligations under the Account or this Agreement to any person or entity. You may not assign to anyone the Account or any of your rights or obligations under this Agreement unless we expressly consent to and permit such assignment. If we do, you and any successor or assignee will comply with our requirements and procedures for doing do.”
Almost sounds like the bank is guarding against bogus assignments, doesn’t it? You bet they are. They have seen this trick attempted countless times before. The language is clear enough. The bank has the right to assign or transfer the account. You, on the other hand, do NOT. That’s just the way it is, folks, and wishing otherwise will not make it so.
If you are currently looking into debt relief options, and someone tells you they can “take over” your debt obligations for you (in exchange for a hefty upfront fee, of course), then you know you’re dealing with a scammer. It doesn’t work, period. Don’t make a bad situation worse by paying huge fees to a rip-off artist!
This reminds me of a credit repair scam that was circulating some twenty years ago. The television ad showed a well-dressed gentleman pointing to a “law” that gave you the “right” to good credit. If you looked up that law, however, you would find it had to do with a foreign adoption of a particular child, and nothing to do with credit.
Unfortunately, none of his clients bothered to look it up. Their loss, his gain.
Gerri, thanks for your comment. In my view, the citation of case law is really intended
to fool the victims rather than the creditors and/or courts that are on the receiving
end of these bogus “assignment” documents!
Jeff Allan says
Yes makes sense. However why arent people looking up federal law which states, its against federal law for a bank to lend its own credit?? Hmmm… wonder how they got away with that one??
Jeff, I guess you must have missed this discussion thread. Happy reading. 🙂