Thursday, April 28, 2011

Beware a Discover Card Lawsuit

Even a small amount of experience dealing with collection agencies teaches most people that defending a lawsuit from a collection agency isn't exactly rocket science and usually goes something like this:

1. You recieve a summons from the collector. 

2. You respond to the summons and show up in court. You demand proof that you owe the debt.

3. The collection agency requests time to come up with proof.

4. The collection agency cannot find proof. The judge dismisses the lawsuit. Game over.

Unfortunately, not every debtor has such a pleasant experience in court. Depending on the original creditor, you may have a much tougher time using the law to your advantage in a debt collection lawsuit – especially if that creditor happens to be Discover.

Why Collection Agencies Lose Lawsuits

As I mentioned yesterday, collection agencies that file a lawsuit against you do so in the hope that you won't respond and the company will subsequently win a default judgment against you. Collection agencies rarely have complete documentation proving that you owe the debt they claim you owe. This is because creditors sell debts in batches. Compiling and including extensive data on each delinquent account requires more time and effort than the original creditor wants to provide. After all, its already taken its tax break on the debt.

This lack of supporting documentation usually doesn't hurt the collection agency very much. It either successfully scares the debtor into paying through threats, annoys the debtor into paying through persistent phone calls or sues the debtor. The debt collector doesn't have to bother with proof if the debtor doesn't show up in court and ask for it. The court assumes the collection agency's assessment of the situation is the correct one and BAM! default judgment.

Discover Card Collection Process

The Discover card company does not sell its unpaid accounts to collection agencies. Rather, the company maintains ownership of the account and hires collection agencies to collect the debts on commission. Discover also doesn't drop packaged debts on collectors like a box of unwanted kittens. Because Discover has a continued interest in the collection of the account, it provides its collectors with full and complete documentation for each account.

The thorough documentation procedure that Discover uses makes it almost impossible for consumers to successfully defend themselves in court. If your debt was on old Discover card, you can pretty much bank on the fact that the collection agency will show up to court with your original signed contract in tow.

Debt Validation and Old Discover Debts

Most collection agencies, when faced with a debt validation request from a consumer, will send the consumer an account statement and call it legitimate validation – if they respond at all. If your debt was from Discover, however, the collection agency likely has everything it needs to provide you with complete validation.

Although the Fair Debt Collection Practices Act does not specify what constitutes validation, sending you copies of the extensive paperwork the company has that supports your liability for the debt benefits the collector considerably. If you know the collection agency has the documentation necessary to prove its case in court, you're more likely to make payment arrangements rather than taking your chances with the judge – saving the company both time and money.

Stop Discover's Collection Agencies With FDCPA Violations

I typically don't take on Discover. That isn't because they can't be beaten – they can – its because my job involves scaring off the collection agency before the case goes to court. If you're getting a summons from a collection agency that works for Discover, its a pretty fair bet that you're going to court.

I made one exception back in 2001 when the person facing Discover was my grandmother. My grandfather had recently passed away. When he died,  he still owed a balance on his Discover card. The Discover account was his and his alone. For some reason Discover thought it would be a good idea to try and falsely convince my grandmother that she was liable for that debt.

Getting rid of them at that point was realtively simple since they misrepresented the debt and, in doing so, clearly violated the FDCPA. Suing my grandmother would only have resulted in a counter-suit, so they swallowed the debt and disappeared.

And here is my point: if a collection agency that works for Discover is after you, your best bet is to nail the company on an FDCPA violation. If the collection agency has something to lose, they very well might leave you alone – especially if you owe less than $1000.

Related Posts:

How to Respond to a Bill Collector's Lawsuit

Make Yourself Judgment Proof

The Debt Collection Lawsuit Threat

Funds Exempt From Bank Account Garnishment


  1. I have been told that the FDCPA didn't apply to Discover, because they are an original creditor. How can I get them on an FDCPA violation? When I asked for validation, they sent a "cardmember agreement" and some copies of monthly statements.
    I've also asked for the original signed contract, and for proof of who owns the debt. I remember reading somewhere that Discover sells off the credit card accounts and doesn't own them.

  2. The FDCPA as a whole applies only to third-party creditors, not original creditors. But – and this is a big "but" – most states have adopted the FDCPA as the governing statute for collection activity from original creditors. You don't mention your state of residence, so I can't tell you whether your state has or has not adopted these regulations for original creditors.

    In some cases the state-adopted regulations apply only to consumer abuse and not procedures. For example, you'd be able to sue Discover if a representative threatened you with bodily harm, but you wouldn't be able to force them to send you a debt validation.

    Unfortunately, because the FDCPA does not define what constitutes validation, anything they send you "technically" fulfills their legal obligation to validate the debt – and that is if that legal obligation even exists for original creditors in your state.

  3. What website and under what heading would I look to find if Michigan adopted the FDCPA as the governing statute for collection activity from original creditors.

  4. You can start here:

  5. Hi there !
    Flagging economy & bad debts ! We all know that an original creditor always go for a third-part debt collection agency.Reason being their dedicated time & work process.Collections agency relevance is gaining new heights and I think that is why FDCPA has given the consumers such a wide variety of legal rights.

  6. what to failure, family illness with death and bad accident sent our 36 years of paying on time to disaster. Could not pay Discover..delivered summons and we filed a motion to dismiss 15 months ago with no communication since. Then our clerk of court sent a letter saying the case would be closed after September 12 and then we received a hearing notice from them (zakheim in florida) with some copies of old cc statements but no agreement or signed agreement or notarized letter from DS saying debt is valid. we have30 days....can't even pay regular bills. What can we do and do we dare notify ds to try and settle for less

  7. Discover has levIed my bank account and states the account was last paid in 2003. Is there anything I can do to get my money back? I never received anything from them now they are saying I owe 4700... My state is New York

  8. An account that was last paid in 2003 is well beyond New York's SOL. However, its possible that Discover filed a lawsuit against you while the statute of limitations was still in effect and is just now enforcing its judgment. You need to figure out how old that judgment is. The judgment and the relevant dates should be listed on your credit report.

    You can stop the levy by demonstrating that the funds in the account are exempt from garnishment or by having the judgment vacated. The web address below is part of New York's Unified Court System and explains the process for vacating a judgment much better than I can.

  9. Hello,

    Question for you I have 2 collections after me and I would like to request validation, What can I do is they come back with statements and no signed contract? Is that considered validating the account? I live in California.

    Thank You

  10. Hey Lee, You offer some very interesting points here from DC and their croonies. I was a card member with an insurance clause that said they would pay for any dept owed (monthly payment) if I was layed off or unable to work. I turned in a claim and they were late on the payment, charged me a late fee and after that I was told to prove to them that I was laid off. I tried to get that straightened out and at the same time I also told them where they could stick the rest of te payments because of the bs they were putting me through. ( I owed about 600 at the most).
    The next thing I knew was that at a time I could not be at home to attend a hearing they had set up , I was found at fault and they grabbed my bank account , took my sons money from his account, (because I had set it so that only him and I could take out his savings , hence my name was on it) and they also put a lein on my property. it is now up over 4000 and I have told friends that they can have the property , after I spread the 25 lbs of mercury I have saved for them . I just can't see why they would charge over 20 % for a problem that they themselves created.

  11. Discover Card Discriminates against their Customers who are delinquent or charged-off, if you are in current standing & you make a Payment or Payoff using electronic transfer of CASH from your checking account (which is cash they are taking from your account, with your permission), Rep from the Discover Executive Offices (office of the president Discover) told me 'They assume the money is there unless/until the bank tells them different, they post to your account and you benefit from additional credit line, etc'.....
    BUT if you are delinquent or charged-off and you pay them cash (taken from your account, with your permission) THEY HOLD THE CASH hostage for 10, 15 or 30 days before they actually Give YOU Credit for it. That is:
    Double Standard
    Your money is in their hands and their policy is to hold it hostage (or their vendor/agency) for 10 to 30 days before believing that you really did Pay before providing You, their customer any acknowledgment of this payment.
    I was NOT told of this prior to agreeing to give them CASH in order to QUICKLY resolve this - but I was told after the fact 3 very different time periods, one lady said 15 days is procedure. Next lady said 10 days, it's been 7 and the man in the Office of The President said 30 days.
    They have my money and I do not. They will not acknowledge receipt of my money because of an antiquated computer system and/or procedure.

    I believe there may be some statute that mandates them to immediately Acknowledge receipt of my Money. Just BEWARE of Discover Card - they discriminate. Reputations are an important asset that they apparently do not care about, nor their customers.

    The man at the Office of the president said he would call me back, that 4 hours ago on Friday afternoon. Obviously they also do not keep their promises about returning calls!

  12. I used to work in the collection industry and I love how all of you help each other get out of paying your debts. How would you like it if people owed you thousands and they were given "rights" and are getting together and scheming to avoid paying you even though they are essentially stealing from you?

    1. It is not the money that consumers owe the collection agency. they owe if from credit card companies and banks. so collection agencies has no right to collect money owed to some other entity. collection agencies buy debts in junk for a penny per dollar.

  13. I not trying to avoid paying, but when my debt is 3800 and now it 6400 because of "legal fees" and other misc fees I have a big problem with that. also when I am willing to pay almost 75% upfront and then they come back to you with a number 1000 over what it was 2 days ago, I have a problem with that. These "rights" are to protect us not make it so we don't have to pay, but there is a statute of limitations in each state, and when its past its past.

  14. Right, Mr. Anonymous Collector...and that's why all the major crdits cards including American Express and Discover are being hit with Joint Consent Orders for deceptive credit card practices including charging illegal fee and illegal rates of interest...because they are so aboveboard and honest that credit card holders should just pay whatever it is they say...please crawl back down into the hole you came out of...simply put, the law is the law and EVERYBODY has to abide by it, even the credit card companies...

  15. This is for anonymous and his regarding his comments dated November 21, 2013. If you are following the rules, you shouldn't have to worry. So, let's say you are arrested, Wouldn't you want someone protecting your rights or.,would you just suck it up and go prison or the death chamber to wait for your execution? This is still America, pal so try and remember that. Since,when we exercise our rights are we the bad guys?