“Universal Default” is when your credit card company adjusts the terms of your loan because you “defaulted” with another company. In reader P.’s case the “default” was a Blockbuster video that his friend forgot to return. Discover Card took this opportunity to double P.’s interest rate. When he tried to fight it by closing his account, it launched him into a 2 1/2 year legal battle with Discover, a collection agency, and now the credit bureaus.
I’ve been in a dispute with Discover Card for the past couple of years involving an account I opened with them in 2001. Initially, all was well on the account, I made payments on time, kept a decent balance on it for them to earn interest from, paid them off about 2x-3x my minimum balance. Then came the day I asked a friend to return a Blockbuster Video for me, which he failed to do. I didn’t know about it until about 45 days later when I got a letter stating my account had been placed with a local collection agency. I immediately contacted the agency, explained the situation, and payed them in person at their offices within 24 hours of receiving the notice.
I checked my credit report about 45 days later to see if that collection was going to negatively affect me, and it didn’t appear on any of the big three reporting agencies, so I considered the matter over and done with. At least, until I got a letter from Discover Card stating they had reviewed my account and that they were increasing my interest rate from 11% to almost 22%(!) – despite my flawless history with them and my other three credit cards. I fought back and forth on the phone with them asking them what was going on, and eventually they revealed that it was due to a default with another agency – The aforementioned Blockbuster video that hadn’t been returned – Never mind that this had never appeared on any of the big three credit reporting agencies, and never has, so I don’t even know how they knew about it. By the time I got an answer out of them as to what was going on, I had only about a week to meet the cancel-my-account deadline they set forth, so I immediately typed up a letter demanding they cancel my account.
Considering THIS matter over and done with, I then went on about my merry way.. until I got a statement the next month showing not only the increase to my charges, but also overage charges caused by this increase in interest, and late payment fees which put me over the balance, and then, of course, overage charges. Another round of phone calls revealed that they were taking the stance that the letter had arrived 1 day after the due date and they had full rights to change the agreement since I defaulted on replying in time, and the representative refused to help me any further. Another round of phone calls the next week got me as far as getting a rep smart enough in the law to admit that the postmark is what mattered, not the date of arrival, which was a good 5 or 6 days before the due date, but of course they did not retain envelopes as evidence of when I actually sent the cancellation notice.
Ding ding, round three. I faxed the copy of the certified letter receipt and a letter explaining the legal binding of postmark over date of receipt and my situation for whom it may concern. I called a few days after this letter was delivered, confirmed that they had received it, and was assured they’d look into it.
Sometime during this whole thing I sent them a payment for $1000, as a show of good faith and that I was trying to work with them. They applied this to all the charges, which I was disputing, instead of the actual balance, and this caused a further upset and round of phone calls and letters. After this, I sent them a letter in writing stating that I would make no more payments until the matter of the interest rate and inflated charges was settled.
Eventually they finally charged the whole account off and sold the account to a series of collections agencies, each one more nasty and rude than the first. None of them understood the concept that I was perfectly willing to pay off the original remaining $1,200 balance, despite having basically been robbed for $1000 already, just none of the ever increasingly inflated charges they were demanding, despite the fact that I wrote letters of dispute to each new agency I was placed with, which seemed to happen about every 60 days or so. By this time my account had ballooned to over $3,000.
Eventually, it was placed with a law firm in my state, who demanded that I start payment on the balance they were asking ($2005, an amount which seemed to vary depending on what agency or which Discover Card rep I talked to on any given day) or they would file a lawsuit against me. Research on this particular law firm showed that they, in fact, had zero hesitation filing lawsuits, even if the charges were being disputed, or against the wrong people, etc. Other accounts I managed to dig up via Google even showed them contacting and even trying to subpeona employers, family members, you name it, and that they had a tactic of filing without serving proper notice to the defendant, obtaining a default judgment since they would fail to appear since they didn’t know about it, and dragging a simple collection into a long, involving legal matter that would cost me far more to rectify than the original balance of the debt.
Not wanting to turn what was already a dog and pony show until a full blown circus, and now 2 1/2 years into a never ending ring of disputes and challenges, I just conceded defeat and agreed to pay the balance in payments. The law firm agreed to my payment offer, and said that they were going to send me “some paperwork” to finalize everything. When the “paperwork” arrived, I found it was actually a Confession of Judgment, and there was no direct mention of the payment agreement or any stipulations that they would only file the Confession of Judgment in the event of my default, etc. This basically meant that at any time, they could choose without my knowledge or notification, to appear before a judge, show them the signed Confession of Judgment, and he could enforce whatever methods he chose to collect on the account, including repossession and docking my paycheck directly.
Naturally, I refused to sign this, and called to tell them so. I offered to have a lawyer re-draft it with stipulations that they could hold the Confession of Judgment in their care, but only file it in the event that I as 15 days or more past an agreed upon payment date, or some other kind of compromise, which they flat out refused. They basically said I sign it, or they’d get the default judgment, and that was that.
When I said I’d already retained an attorney in the matter, their tone suddenly changed, and now they wanted to talk settlement. The words “retained an attorney” apparently still do have some kind of magical intonation, even with other attorneys. They offered a settlement agreement of $1,200, which is pretty much what I owed them in the first place… well, if you exclude that $1,000 they stole to cover their bogus fees and charges, at least… so I agreed to that, and paid it within 72 hours. I waited for the letter of satisfaction from them, then another 30 days, and checked my credit report to see how it was being reported. Low and behold, all three agencies report it as having received a $1,200 payment, with an $805 balance, and it’s marked as “Charged Off/Bad Debt,” NOT as “Settlement” with a balance of zero.
I contacted the collection firm, who basically said I should contact Discover Card. Discover Card said I needed to contact the collection firm, and that they had remitted my payment, but they had never told Discover Card that a settlement agreement had been reached. I stated I had the letter of satisfaction from them, and would be happy to fax it over, and they said oh, of course, that would clear it right up. So I call a week later to confirm they received the fax, and of course no mention of it is on my account, and this has been repeated four times now.
I opened disputes with all three credit bureaus who opened investigations into the matter, and mailed them copies of the letter of satisfaction. All three updated in June with the same result:
Status:
Account charged off/Past due 180 days. $2,005 written off. $10 past due as of Jun 2008.
Obviously, $2,005 were NOT written off, a settlement was reached. And what the hell is this $10 past due as of Jun 2008?
Keep in mind I’ve already paid them $2,200 on a $1,200 balance at this point.
At this point, I don’t even care about getting my money back. I just want the bizarre balance removed and the comments to reflect that the account has been settled as agreed, with a balance due of $0. Each Discover Card representative I speak to has no prior knowledge of anything I’m talking about, and results in the same thing; fax your letter of satisfaction, and we’ll get it fixed, only to call a week later and repeat the whole process again.
I’m at the end of my patience and knowledge as to what to do here. Is there anything I can do to get my credit report updated “correctly?”
What a horror story!
In your case, we believe that it would be beneficial for you to consult a lawyer that specializes in consumer debt cases. As you pointed out, the phrase “retained an attorney” does still get the job done. Actual attorneys can be even more effective.
In the meantime, the FTC says that you can add a statement to your credit report:
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.
Good luck.
How to Dispute Credit Report Errors [FTC]
(Photo: imjoshdotcom )
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this guy was really really bad at keeping track of this whole thing. future reference, get a signed notice of an agreed settlement amount BEFORE sending them money. then after paying with something trackable that being said, get a lawyer.
Heh. This reminds me of a call I got from a collection agency once. They said I owed 2000 dollars on an old card, even though I had canceled it two years ago. The lady I talked to was REALLY rude and DEMANDED that I pay the money, even though at the time I was in a ROUGH time in my life and didn’t have the money. I was told “Well you better find a friend who has 2000 dollars to loan.”
Obviously I never paid it and never heard from them again.
@@katylostherart: I’m not sure what you think a signed notice of settlement would do for me in this situation. I have the letter of satisfaction, which trumps all – An agreement was decided upon, and I fulfilled my end of the bargain, end of story, I have the proof of which, and the law firm that collected the debt agrees with me.
Should I have retained a lawyer from day one? Probably. Should I have conceded defeat and given in to their bogus charges and agreed to a settlement? Probably not. But you have to understand that towards the end, threats were being made of a lawsuit, in which I would be unable to adequately defend myself on such short notice, and a settlement was the only fast and sure defense against having a default judgement against me, which is far worse than simply having a settled account, in terms of your credit report. Should things have been handled differently overall? Definitely. But hindsight is 20/20, as they say, and this is my first (and thus far, only) experience with this kind of matter. I could not afford an attorney for most of this, and I didn’t befriend one well enough to ask for charity until the settlement agreement had been reached, at which time I assumed things were pretty much settled.
I’m not even disputing the bogus charges anymore. I don’t care about the money lost or the negative on my credit score. I just want them to report it as settled. As far as anyone pulling my credit report right now is concerned, the account has $2005 charged off and $10 180 past due, which isn’t even a remotely close to accurate statement. A settlement was reached. They have the right to disclose the amount written off, but they do NOT have the right to mark it as a Charge Off or Bad Debt or misrepresent the amount owed, which is exactly what they’re doing, despite a finalized settlement agreement which all parties involved agree with, except Discover Card. They have hired another entity to act on their behalf, and are not honoring that agreement.
A signed agreement of the terms of the settlement does not matter. I have a letter in my possession stating that the account has been satisfied and that I owe nothing. THIS IS NOT BEING HONORED. Your suggestion is irrelevant, at this point.
@azntg:
Azntg, since when is Blockbuster one of “my creditors” ?
As far as I know, at no point did I provide Blockbuster with consent to pull my credit report when I signed up for their in-store membership.
Let’s say I froze my credit reports and I carry only three credit cards, a MasterCard, Visa and Amex. In addition, I’ve opted out at optoutprescreen.com.* That means the only activity in my file would be inquiries and account activity from the three existing creditors with whom I have an established relationship.
You are correct in that if I pay any of my three existing cards late, they can update my account status immediately as they already have access to my frozen report. And if I default on one of my existing cards, the bank–or collection agency acting on behalf of the bank–can also pull a report, even though my file is frozen.
Now here is where you are wrong: Blockbuster-or an agency on their behalf–cannot come along (after a file is frozen) and say, ‘hey, let us in, we’re one of his creditors too.’
The whole point of freezing your credit reports is to stop any new activity–with just one exception: negative reports stemming from public records. So if you are sued in civil court and a judgment is awarded, that will appear on your credit file regardless of whether it is frozen or thawed.
*Before freezing your reports, it is important to also opt out of pre-approved offers at outprescreen.com. In this example, Blockbuster (or any other creditor) could gain access to your report under the guise that they want to offer you a pre-approved credit card. With that inquiry, they’ve established themselves as having an existing relationship, which may lead to future access.
You know, if the homes, offices, and vehicles of these dicks started catching fire, they’d never figure out who did it. There would just be too many suspects.
What a cash cow Ball Buster Video and all its little cronies.Feel sorry for ya man.
Block Buster was PUT out of business by the city that I used to live in because of fraud. Criminal charges were pressed against the store by the city. If you rented a movie, walked out the door, walked back in and returned it they would charge you a late fee. I will never go to Block Buster.
Messy, very messy. My fiance went through this same kind of thing too with collection agencies, even the lawyer she hired was a real piece of work too! Makes you feel pretty helpless out there on the battlefield, sometimes you wonder if everyone really is out to screw you.
@azntg: You might be right, after all, and in that case, I stand corrected and dejected. For if these exclusions from Equifax’s website are true, it means there is really no concrete way to protect your credit:
[www.equifax.com]
And here I thought prior relationship meant one who had previously accessed my credit report. The obvious concern here is that even if you freeze your reports, an ID Thief can open up a Blockbuster account, rent an apartment or default on any type of obligation under your name and their default will end up on your report anyway. So all you’re really doing by placing a freeze is stopping credit card and loan thefts in their tracks.
Oh well, now I have to reactivate my subscription to a credit report monitoring service which incidentally, was terminated when they could no longer access my report after it was frozen. I guess they lost a lot of subscribers to the credit freeze and quickly fixed that problem!
Have your friend pay up; this is all your friend’s fault
I don’t know sucks more: Blockbuster or Discover! One more reason to go with Netflix and American Express (or cash!).
Credit bureaus are partially at fault, too, since they are really for-profit corporations offering a “service” that they’re supposed to make sure is accurate, but it’s your job to pay them to see that they’ve gotten everything right so that you don’t get screwed when taking out a loan or accruing interest on your credit cards.
If all else fails, look in the mirror and take responsibility for signing up with such a crappy company! I hope that movie was worth it!
Interestingly enough, I got my last traffic ticket (waived in court when officer did not appear) while trying to access the shopping center parking lot where the Blockbuster store was located. Haven’t gone there ever since.
Forget about Discover Card!
File a claim in small claims court against the Credit Bureau, please everyone shut up and read further, of course they will claim that they aren’t to blame, it doesn’t matter, charge them with “Defamation of Character”, if you have money, hire an attorney, if not use legalzoom or one of their competitors who will be able to file everything you need electronically.
Worked for me.
Hire an attorney immediately, and sue everyone–Blockbuster, Discover, the collection agency AND the credit bureaus. Sounds like everyone in this story is in violation of the FDCA! Here’s a website to help find an attorney in this area of practice
[www.naca.net]
oops, I meant FCRA
This really doesn’t have anything to do with Blockbuster. He didn’t return the dvd, that isn’t in dispute.
Discover is the one screwing him.
He didn’t return the dvd. So Blockbuster had every right to do this. Discover didn’t have any right to tack on an extra 10% because he didn’t return a dvd.
I know tons of people hate Blockbuster here, but they didn’t do anything wrong.
@claming: …yeah, exactly, what does blockbuster have to do with anything here???
this sounds eerily familiar to what i went thru with discover.
essentially, asking them to close your account (when you still have a balance) triggers a buttload of fees & almost instantaneous sell-off to one or more collection agencies.
when i closed my account, i had a $1000 balance. when i tried to pay on the closed account, they rejected my payments, refused to send bills & claimed the account didn’t exist.
when i finally tracked the account down, it had ballooned to $2800. i wasn’t as savvy as i am now or i wouldn’t have let that happen, but it is what it is.
fixing entries with the CRBs (esp. in a case like this) is a nightmare – good luck to the OP. my advice – watch out for the “soft delete”. frequently a mistake will disappear in the short term only to reappear 3 mos. later & the process starts anew. fun stuff.
What ever happened to the movie? Did you give your friend a good ‘ol fashion butt whooping?
Yeah, just a tip: When I got divorced, of course, LOTS of debt. One credit card that had a limit of $2500 was well over $4500 after two years of not paying on it. (I was poor, no heckling) I contacted them after I got a good tax refund… I offered a settlement of $2300 over the phone, which of course, they accepted. I faxed them MY terms of paying, and the manager had to sign and date the document, then send it back before I would pay. They actually retyped everything that I asked for, officially signed and sent it back with this term:
That after paying the settlement amount, they are to mark my credit report “Paid in FULL” no, not “Settled in Full” or anything else… it HAS to say “paid in FULL”. Of course, they frigged up reporting it to the credit bureaus and with one copy of that letter, not only did the credit bureau see I WAS RIGHT, but they COMPLETELY REMOVED IT from my credit report. How cool is THAT.
too long to read…I’m suffering from CLH.
Ive never heard one good reason to get myself involved with credit but ive heard this and a million other reasons to avoid it like the plague. And so I have. Im 20 and somehow ive managed to insure there isnt a single credit card company out there that knows my whereabouts and if they come and find me I’ll sooner send them back to hell.
I hope this works out for you OP.
@pHluid: what i understood from the story was that there wasn’t any proof, just conversations. my apologies if i misread it.
“I found it was actually a Confession of Judgment, and there was no direct mention of the payment agreement or any stipulations that they would only file the Confession of Judgment in the event of my default, etc.”
that coupled with “waited for a letter of satisfaction” lead me to believe that you paid something before they sent an agreement saying “you pay this, we say it’s done” and THEN get proof you paid it.
like a signed invoice and then the canceled check in response to the invoice. does that make sense?
Never ever ever ever ever ever pay a collection agency.
Even though the original company will lie and say they cannot accept payment once submitted to a collection agency, they can, will and at least in my state are legally bound to do so.
Also, never ever ever ever ever pay anyone when there are charges in dispute. You are legally binding yourself to the charges at that point.
If I’m moving away from town, do I need to call Blockbuster to “Close my account”? Haven’t rented movies there in months….
@katylostherart: You’re kind of misunderstanding, yeah. We worked out a payment agreement, finalized all the details, they said they were sending paperwork that would have everything in writing, but it didn’t. It was a “Yes, you own my soul and feel free to dock my paycheck and put a lien against my house” Confession of Judgement.
In regards to the settlement, I do have a (faxed) agreement from them saying you pay XXX amount, we’ll close the account. I have the checks that show I paid that amount, and I have the Letter of Satisfaction from them saying that I fulfilled my end of the agreement and everything is done. I left out some details; the story was long as it was.
Anyway… UPDATES! The attorney firm was retained by TRAKAmerica, a sort of clearinghouse “legal network” that hires firms local to the debtor so they can intimidate them with litigation. Check out their website here, just the wording of it angers me: [www.trakamerica.com]
“As a legal network, we can use legal talk off language in these conversations, which often means debtors agree to a payment plan rather than face the legal process.” and “We are no longer requesting money from debtors-we are actively taking it.”
Good lord. Thanks for putting my fate in the hands of the vulturous bastards, Discover!
I’ve tried twice to contact them by phone. The first time I got a “We’re closed blah blah blah” and it dumped me a voicemail that was completely full and would not let me leave a message. The second call I got in, but it wanted a party extension. When I pressed 0 for an operator, I again got dumped to a voicemail that was full and could not leave a message. Since then I have tried to call them 4 times from the same phone number after that, and each time I get an “All circuits are busy.” message and it hangs up on me. If I call from a DIFFERENT phone number, it goes through, but I get dumped to the same full mailbox. So apparently they blacklist your number after the first call. Nice, eh?
I’m making one last round of letters out to Discover, the attorney firm, TRAKAmerica, and the big three CRA’s. If I don’t see action in 45 days I’m asking the lawyer to take over and handle the matter from here, because this could not be a clearer violation of federal law.
@Pro-Pain: Dude, Fuck Amex.
I forgot about a $40 charge I made on my seldom-used Macys card for a couple of months. By the time I realized my mistake, I owed almost $80. I paid Macys immediately. About the same time, I logged in to check on my Amex accounts and found out that they’d closed them BOTH (one over 4 years old, the other 2), without so much as a courtesy phone call informing me of this. (Good thing I wasn’t traveling abroad and counting on them to work when they made this decision!)
About two months later I got the letter from them informing me that because of “negative information in my credit file” they were closing my accounts. The stupid little Macys delinquency was the only negative information on my credit report. I suppose if I’d had a balance on my Amex they would have jacked up my interest rate to 150% or whatever, but I guess they figured the only way they could stick it to me with a zero balance was to close ‘em.
WTF, it was Macys that I arguably “harmed,” (even though 200% ROI they got over 3 months is a pretty good investment) so how fucked up is it that they didn’t even threaten to close my account, but Amex, who has always gotten paid on time, was so spooked they had to dump me immediately?
I will never carry an Amex card again.