Giving debt collectors a bad name

Imagine a payroll check that was supposed to be deposited electronically didn't show up on time. Oops-you're looking at a $35 bounced check fee.

But your bank made the problem much worse through its policy of processing the largest check first. SO instead of one bounced check you have a dozen bounced checks on your hands, with a $35 fee for each one.

Viola! You owe the bank $400.

Imagine the bank refuses to budge, and in disgust you walk away from the bank and your defaulted checking account .

A few years later the ghost of that unhappy incident arises when your bad "debt," along with that of other former customers, is purchased by Bradstreet & Associates, LLC, a Minnesota debt buyer.

Bradstreet purchased old overdrawn demand deposit account debt from another debt buyer, which purchased the debt from Wells Fargo and US Bank.

All well and good. Buying old debt is what Bradstreet does. But the firm didn't stop there , according to Minnesota Attorney General Lori Swanson, who has filed a lawsuit alleging that Bradstreet & Associates illegally charged people up to 21.75 percent annual interest on that old bank account debt.

In some cases, Swanson said, Bradstreet got Minnesota courts to enter default judgments against unrepresented people for the unlawfully high interest after it represented to the courts that the interest was owed.

Interest of 21.75 percent is more than three times the 6 percent statutory rate of interest allowed by Minnesota law.

In some cases, the unlawful interest increased a consumer's debt by thousands of dollars. One woman owed the bank $1,886, but after Bradstreet charged 21.75 percent interest for nearly five years, her alleged debt increased to over $4,000.

A new state law requires debt buyers to prove that they are suing the right person for the right amount when they go to court seeking a default judgment.

Swanson and the Legislature deserve kudos for that new law, and for acting to protect consumers in a world filled with corporate sharks.