220.127.116.11 Representations and Warranties
Many sellers do not guarantee the accuracy of the data that they transfer to the first debt buyer. Instead of affirmative promises, many debt purchase and sale agreements specifically disclaim important aspects of the transaction.300 For example, many sellers do not warrant that they have title to the accounts they sell, disclaim that the amounts listed as owed are correct, and disclaim compliance with applicable laws.301 Moreover, some debt purchasing agreements state, “Buyer expressly acknowledges that . . . documentation may not exist with respect to the Loans purchased by Buyer.”302
Although the CFPB reported that their review of some 2013–2015 debt sale agreements from credit card issuers included affirmative representations about title, compliance with consumer laws, and accuracy, they noted that in some cases these representations contained significant caveats such as “to the best of the seller’s knowledge” or stated that records are “an accurate copy of the seller’s records,” rather than stating that the records were true and correct.303 It is not clear whether the changes noted by the CFPB are present in purchase and sale agreements for other types of debts.
Despite disclaimers or caveats about accuracy, debt buyers tend to represent that information as entirely correct and accurate when collecting debts.
300 Dalié Jiménez, Dirty Debts Sold Dirt Cheap, 52 Harv. J. on Legis. 41 (2015); Fed. Trade Comm’n, The Structure and Practices of the Debt Buying Industry (Jan. 2013).
302 Loan Sale Agreement between FIA Card Servs., N.A. and Cavalry SPV I, L.L.C. 31 (Oct. 29, 2008), available at http://dalie.org and http://perma.cc; Loan Sale Agreement between FIA Card Servs., N.A. and CACH, L.L.C. 31 (Apr. 14, 2010), available at http://dalie.org and http://perma.cc; Loan Sale Agreement between FIA Card Servs., N.A. and CACH, L.L.C. 29 (Aug. 11, 2009), available at http://dalie.org and http://perma.cc.
303 Consumer Fin. Protection Bur., The Consumer Credit Card Market (Dec. 2015).