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In a long article on Bloomberg News, but well worth the read:
How unscrupulous lenders have used an obscure legal document to wreck havoc against small businesses nationwide.
The lenders’ weapon of choice is an arcane legal document called a confession of judgment. Before borrowers get a loan, they have to sign a statement giving up their right to defend themselves if the lender takes them to court. It’s like an arbitration agreement, except the borrower always loses. Armed with a confession, a lender can, without proof, accuse borrowers of not paying and legally seize their assets before they know what’s happened. Not surprisingly, some lenders have abused this power. In dozens of interviews and court pleadings, borrowers describe lenders who’ve forged documents, lied about how much they were owed, or fabricated defaults out of thin air.
By seizing their bank deposits, Yellowstone had managed to collect its money ahead of schedule(60k on a 38k loan) and tack on $9,990 in extra legal fees, payable to a law firm in which it owns a stake. In about three months, the company and its affiliates almost doubled their money. At that rate of return, one dollar could be turned into 10 in less than a year.
Everyone else involved in the collection process got a slice, too. SunTrust got a $100 processing fee. Barbarovich’s office(NYC Marshal) got approximately $2,700, with about $120 of that passed along to the city. The Orange County Clerk’s office got $41 for its rubber stamps. The New York state court system got $184.
Cash-advance companies have secured more than 25,000 judgments in New York since 2012 worth an estimated $1.5 billion.
It sure explains why my small business gets a ton of loan/cash advance offers.
It should be noted that these letters have been prohibited in some states for over 50 years, and banned nationwide for consumers since 1984. (but even when banned by a state, they pursue it in a state where they are legal.)
(Score: 3, Insightful) by Anonymous Coward on Wednesday November 21 2018, @02:27PM (14 children)
Don't worry ! The free market will fix it ! The free market fixes everything !
Oh, wait...
(Score: 2) by DannyB on Wednesday November 21 2018, @02:30PM (10 children)
The government will fix it ! The government fixes everything !
(but I think this is already "fixed", using government rules and laws. Won't fix. Working as intended.)
The lower I set my standards the more accomplishments I have.
(Score: 3, Informative) by PiMuNu on Wednesday November 21 2018, @02:41PM (5 children)
Yes, let's privatise the police, that will help.
(Score: 3, Insightful) by DannyB on Wednesday November 21 2018, @02:53PM
Only if we privatize the prisons and education system as well. That way everything works together in synergy.
Education system ensures that there are enough uneducated dolts who will fill the private prisons, but also enough hothead bullies to staff the police departments, as well as the right amount of barely employable morons to pay for the entire system to just barely work while the rich continue to live lives oblivious to the problems of the machine that supports them.
Also privatize the fire department and pay for it with private fire insurance. (Sorry ma'am, according to your private fire insurance policy, we cannot start fighting the fire until at least 1/6 of your home has been destroyed.)
The lower I set my standards the more accomplishments I have.
(Score: 3, Funny) by suburbanitemediocrity on Wednesday November 21 2018, @04:44PM (3 children)
Why don't the people just read the contracts before they sign the papers. Or if they can't read, hire a lawyer to explain it to them?
(Score: 3, Touché) by PiMuNu on Wednesday November 21 2018, @04:57PM (2 children)
> just read the contracts
> FTFSummary "describe lenders who’ve forged documents, lied about how much they were owed, or fabricated defaults out of thin air"
> hire a lawyer to explain it to them?
Mod +1 Funny.
(Score: 1) by anubi on Thursday November 22 2018, @04:32AM (1 child)
If people read the contract, very few would do business.
The contract is by *far* the most common reason I will walk away from a business offer. Lots of dingbats and fine print scream to me that the business that presented this to me is preparing to financially rape me, and I am best advised to terminate the business relationship immediately.
All that fine print hits me like the sound of a rattlesnake.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by Thexalon on Thursday November 22 2018, @03:04PM
Any organization who encourages me not to read a contract they want me to sign is pretty well guaranteeing I won't sign it.
The current state of boilerplate legalese, though, is pretty telling: Most contracts you'll see someone place in front of you state in no uncertain terms that you are not allowed to sue them under any circumstances, ever. And yes, that's legal in the US, per Supreme Court cases decide in the last couple of decades. Which means, of course, that the organization who wrote the contract can break the rules any time they want, and you can do nothing about it.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 5, Insightful) by loonycyborg on Wednesday November 21 2018, @03:44PM
Government is simply not doing it job by accepting contracts that rescind a party's right to defend itself in court. The only thing a just court can do about such a clause is to rule that it's unenforceable.
(Score: 5, Insightful) by ikanreed on Wednesday November 21 2018, @03:49PM (2 children)
Government that respects contracts as always fair is bad. Period.
You can't have real freedom and market freedom at the same time.
(Score: 2) by driverless on Thursday November 22 2018, @10:37AM (1 child)
Oh I don't know, you could use the contracts against the abusers. For example if the borrowers being screwed took out contracts on the people running these scams, the problem would solve itself over time. And being run from New York, it probably wouldn't be too hard to do.
(Score: 2) by ikanreed on Saturday November 24 2018, @05:25AM
You know, violence for petty revenge is never a problem, people are always sensible about who use violence against in order to specifically adjust for the giant holes you could drive a truck through in your ideology.
You must be living the an-cap dream of owning your own pool filled with the results of constantly jacking yourself off.
(Score: 2) by VLM on Wednesday November 21 2018, @02:47PM (2 children)
Thats kinda the problem, in that loan sharking exists to launder money thru small cash businesses. Tends to be an ethnic gang thing.
"So we're your people and we know where you live and we're gonna leave this $25K of heroin selling cash in your office which you're going to process as cash sales for massage or nail treatments or spa or wtf, and you're going to take out a predatory loan for $10K with our partners and they're gonna F you over to the tune of $24900 or so"
Where it breaks down and hits the news is greedy people gotta greed and theres always some dumbass dealer who gets busted or civil forfeiture-d and his partner is like "F it, lets collect our $25K anyway" even though the dealer only gave the flower shop or nail shop or whatever $15K or so and the small business owner starts whining. Or only one partner in the small business owes $50K in gambling debt and makes a deal, then the other business partner starts complaining.
(Score: 0) by Anonymous Coward on Wednesday November 21 2018, @10:15PM (1 child)
Sounds like the voice of personal experience? Now we now why VLM is a Nazi.
(Score: 0) by Anonymous Coward on Wednesday November 21 2018, @10:51PM
Stop trolling, JIDF warrior.