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Bank of America arbitration settlement could impact debt collection

Aug 30, 2011 Mike Garretson

Bank of America arbitration settlement could impact debt collection

A lawsuit filed by San Francisco against the debt collection firm FIA Credit Services, which had been charged by Bank of America to settle disputed claims, turned out in favor of the city. According to Inside ARM, this development could negatively impact the debt collection industry on a widespread basis.

 The news source reports that FIA Card Services agreed to pay San Francisco $5 million under the terms of the settlement, and to abstain from credit card debt collections in the entire state for a period of two years. As a result, if other debt collectors made themselves tangential to FIA by using the National Arbitration Forum (NAF), as FIA did, to settle debt, the legitimate claims of other agencies might be rendered invalid. San Francisco's suit against FIA stemmed from the city government's claim that the collector had used unfair and unlawful means to go about its business. The issue of concern to legitimate firms in the industry is that they might be unfairly blamed for FIA's alleged mistakes. According to the Federal Trade Commission, California residents filed a total of 19,197 complaints regarding fraud connected to debt collection in 2010.