A Mind is a Terrible Thing

I'd thought Citibank, Wells Fargo, US Bank and others had rightly deserved reputations as near (or fully) criminal enterprises, the mutant bastard offspring of what used to be the banking industry, but apparently there's at least one international banking corporation that doesn't just exploit and mistreat its customers: They actively seek out people to victimize. That firm is known in Spain (where it was founded) as Banco Santander S.A., but they go by other names, including "Santander Consumer USA" here in America.

And the stuff they do will probably make your jaw drop like mine did. Fortunately, there are some massive class-action lawsuits in the works. But still…

The accusations are as outrageous as they are plentiful:  Hundreds of “robocalls” —  in one case, 800 to a single person — to collect auto loan debts;  illegal repossession of cars from active duty military deployed overseas;  late fees assessed three years after the fact and then compounded into $2,000 or $3,000 bills; harassing calls to friends, neighbors, co-workers — even children — on cell phones. And now, a flurry of lawsuits filed around the country, and lawyers fighting over potential clients.

The defendant in the lawsuits is Europe’s largest bank, Banco Santander S.A., which is preparing to make a big push into U.S. retail banking (ed.: known here as Santander Consumer USA). But many Americans already have been introduced to the Spanish financial powerhouse, a first encounter that many liken to a nightmare.

My initial thought was, "Huh, well how bad could they be?" Turns out they're far, far worse than I ever imagined possible.

One plaintiff, Leslie Haynes, purchased a used BWM in 2007 from a dealer in Birmingham, Ala., according to court documents. A year later, Santander collectors began peppering her with demanding calls. The lawsuit claims agents misled her about the balance of her loan, tried to trick her into making additional payments, then refused to stop calling her at work. Agents also repeatedly frequently called relatives, even harassing her sick stepfather and his live-caregiver in the months before he died, it alleges.  (…)

Another plaintiff in that case, Victor Shortt, alleged that Santander agents repeatedly called his minor daughter's cell phone, ignoring pleas to stop. A third, Jacob Glassmoyer, said Santander officials called his parents' cell phones repeatedly, at a time when one of them was undergoing chemotherapy, according to the lawsuit.

One fellow, Donovan Rogers, had his 2005 Dodge Durango repossessed this year. He'd been paying via money order, and didn't miss a payment. At some point, Santander Consumer USA bought his car loan from his original lender — but neglected to send him a notice about the change. This past May, Rogers received a notice he was massively in arrears on the loan. Santander thugs and robo-callers called him over 500 times, and even threatened criminal charges. A few weeks later, they simply took his truck and auctioned it off.

By the way, that's another of their standard techniques: They send you a bill with massive penalties assessed, demanding a lump sum payment. They start up with the harassing phone calls, with the goal of extracting as much money from you as they possibly can — then they take your car anyway and sell it at auction. Why do this?

Used car loans might seem like a hard way for an international bank to make money, but they've actually proven to be more resilient and recession proof that other forms of lending — particularly mortgage lending. Cars, at the moment, appear to be better collateral than homes and are much easier to turn into cash after a borrower defaults. That's part of the reason that Santander was the most profitable bank in the world outside of China last year, and has been on the acquisition trail since the financial meltdown. (emphasis added)

According to the story, another of Santander's tactics is they buy up car loans (especially what would be considered sub-prime auto loans) from other companies, such as Citibank, HSBC, and others. Now suppose you bought a car in 2008 on a 60 month loan, and let's say there was some minor mix-up where in December of that year, your payment was late a couple days. Quite a few lenders will overlook minor lapses and let them go, especially if they fall near a holiday. Not these parasites.

Santander routinely uses another tactic after acquiring a loan from another lender: It searches records for past slip-ups — such as a payment that was late by a few days — then assesses fees retroactively, sometimes years after the fact. By calculating the loan forward from that point, and "cascading" the fees, the firm sometimes claims clients owe thousands of dollars in late fees, and demands immediate payment or threatens repossession.

Just like the mortgage banksters, Santander routinely repossesses cars from active-duty U.S. servicemen and women — despite being prohibited by law from doing so, unless allowed by court order. They're also supposed to reduce interest rates to 6%, again as required by law, which they apparently almost never do.

Why do they do this? How do they get away with it? Because they can, governments refuse to stop them, and because it made them a tidy (estimated) $455 million profit in the U.S. in 2010 alone. Multiply that internationally, and this is a banking conglomerate whose business model is built on fraud, extortion, blackmail, and blatantly illegal collections techniques.

We're talking major criminal enterprise here. If you read on in the story (thanks MSNBC, and the really great reporting from Bob Sullivan in the Red Tape Chronicles), you'll see flat out and repeated violations of very clear and explicit laws regarding loan servicing and debt collection tactics:

• Illegal collection attempts against active-duty servicemen and -women, including illegal repossessions (SCRA violations).
• Robo-calling people's cell phones, including those of people's relatives and children (Telephone Consumer Protection Act and the Fair Debt Collection Practices Act violations galore).
• Accepting automatic deposits from people's bank accounts, then claiming never to have received the funds and refusing to credit the payments against the loan (this is simply flat-out fraud).
• Failing to tell people when they (Santander Consumer USA) purchased the car loan and then, despite the car owner faithfully continuing to send in payments, showing up months later to demand a huge lump-sum, with accrued and compounded penalties.

But hey, even the attorneys can see an easier fat-duck target out there:

Accusations of unfair fees and repossessions don't figure into the lawsuits Santander is facing, however.  Lawyers are flocking to the cases because of potentially lucrative violations of the Telephone Consumer Protection Act and the Fair Debt Collection Practices Act. Santander agents routinely fail to identify themselves, use obscenities, call people other than the actual debt holder and reveal to those people details about the debt, the lawsuits allege — all direct violations of the latter law. The bank has also used automated dialing systems and prerecorded messages directed to cell phones without permission, the lawsuits allege, a violation of the Telephone Consumer Protection Act. Willful violations of that law offer a $1,500-per-phone-call bounty to the plaintiff.

You see, unfair is one thing. But these debt collection techniques have very clear, extremely unambiguous penalties — and with modern day phone records, it is trivial to document incoming calls.

Unfortunately…

The Spanish bank is Germany's largest auto lender, and has enormous auto loan portfolios across Central and Eastern Europe, said Mauro Guillen, a Wharton Business School professor who wrote a book about Santander called "Building a Global Bank." (…)

(D)espite the complaints and lawsuits, he predicted the bank will successfully expand into U.S. retail markets. "And I would predict other acquisitions for them," he said.

My recommendation? If you do have an auto loan, seriously seriously seriously consider moving it to a local community bank or credit union. Even if you have no problem with your current loan servicing company, there is no guarantee they won't sell it to a criminal enterprise such as Santander.

As the saying goes, come the revolution, I have no doubt these slimy plutocratic bastards will be among the first against the wall.