Here, in the Boston Fed's quarterly newsletter. Excerpt:
The problems inherent to the business model are most starkly exposed in the context of lawsuits filed by debt buyers. On the one hand, the debt buyer acknowledges in the forward-flow agreement that the data it received from the bank is limited and potentially inaccurate, with frequent specific disclaimers of warranty of title, validity, accuracy, and documentation.
On the other hand, despite explicit knowledge that the specific accounts are highly suspect, debt buyers argue in court that the allegations about ownership, liability, and amount are “inherently reliable” because the data came from a highly regulated national bank, which has a duty to keep accurate records. All the while, the debt buyers fail to disclose to the courts or to the defendants the terms of the forward-flow agreements, and typically fight any efforts undertaken by consumers to obtain them.
