Personal Finance

When Banks Steal from Their Customers

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Everyone
knows that there are identity thieves out there, cruising cyberspace, looking
for names … preferably with credit card and Social Security numbers as well as
other personal info … that make it easy for them to steal from the lazy, the
inattentive, the elderly, the spaced out, and the vulnerable. In short, you and
me, at least sometimes.

Unfortunately,
it turns out that some of the most successful thieves are those very banks we
assumed had our backs. Instead, they seem to have crept up behind us and
stabbed us in the wallet. For example, yesterday, CreditBloggers
shared the story, "Bank Busted for Skimming from the Dead." Perhaps you’ve heard
of it: Citigroup, the largest bank in the U.S. It spent years "computer
sweeping" the files for victims, which were bilked for $14 million.

Not
to be outdone, without admitting guilt, Bear Stearns has just settled a
case with the Federal Trade Commission for $28 million, having been accused of
engaging in unlawful practices while servicing mortgages. According to the FTC, Bear Stearns:

“allegedly
misrepresented the amounts borrowers owed, charged unauthorized fees, such as
late fees, property inspection fees, and loan modification fees, and engaged in
unlawful and abusive collection practices. Under the proposed settlement they
will stop the alleged illegal practices and institute a data integrity program
to ensure the accuracy and completeness of consumers’ loan information.”


Bear Stearns
Companies, LLC and its subsidiary, EMC Mortgage Corporation, were charged with
violating this “quadfecta” of credit protection laws:

  1. The FTC Act
  2. The Fair Debt Collection Practices Act
  3. The Fair Credit Reporting Act
  4. The Truth in Lending Act’s Regulation Z

In addition to
paying the $28 million, which is probably petty cash to its new owner, J.P.
Morgan Chase and Co., the settlement requires Bear Stearns to behave lawfully
in the future. I don’t know about you, but that doesn’t provide me with much
assurance that bankers can be depended on to be our protectors, especially if
you consider that the FTC has brought 22 other actions in the past decade
alleging deceptive or unfair practices by mortgage brokers, lenders, and
servicers.

Several of
these cases resulted in large monetary judgments that returned more than $320
million to homeowners. But how many haven’t been discovered yet? Any one of us
might be a victim in a yet to be discovered scam … run by the very banks we’ve
trusted with our money.

To protect
yourself, the FTC advises you to keep good records of your payments, including
billing statements, canceled checks, and bank statements. If you have a
dispute, the FTC says you should continue to make your mortgage payments, and
complain to your lender in writing, keeping a copy of your letter and any
enclosures for your records. You’ll find a sample letter here,
along with other tips from the FTC about mortgage servicing. Send your letter
by certified mail, return receipt requested.

Also, if you think you’ve been
cheated by your bank, you can file a complaint in English or Spanish with the
FTC by going to its Complaint
Assistant
or by calling 877-FTC-HELP (877-382-4357).
Finally, speak
up! Share your mortgage servicing horror story with us here. The more we publicize
the ways banks cheat us, the easier it will be to get fair treatment for us
all.

Nancy Castleman – Co-author of
"Invest in Yourself: Six Secrets to a Rich Life" and founder of Good Advice Press. Nancy has spent
the last 24 years teaching people how to get out of debt, save money, and live
better on less. She writes on all these subjects for CreditBloggers.com.

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