AMERICAN EXPRESS LAWSUITS IN NEW YORK
When it comes to dealing with your overdue debt with American Express, there are some very interesting facts about this creditor that should understand. For example, most of the major credit card banks eventually sell their delinquent accounts to various debt purchasing companies. This means that when you are trying to settle an old charge-off account with creditors other than Amex, you will be dealing with a debt purchaser or an other outside collection agency. On the other hand, you won't encounter this situation with respect to any type of American Express account. This creditor rarely sells its accounts, no matter how old. It’s simply a part of the collection culture that developed at American Express, which positioned itself over the years as being “different” than Visa or MasterCard.
First, you might not know this tidbit but, prior to the financial crisis of 2008, American Express was not your typical bank like most other major credit card issuers (such as , Chase, Citibank, Bank of America, etc.). AMEX converted itself to a bank holding company in November 2008 in order to become eligible for Treasury Department assistance under the “TARP” program. The reason this matters is because there are some important differences that need to be taken into account in terms of the “collection culture” at different types of creditors.
Typically we encounter a small group of law firms that represent American Express in collection actions. These New York law firms include, but are not limited to:
- The law firm of Jaffe and Asher LLP
- Zwicker & Associates P.C.
- American Express Legal Department (in-house lawyers)
- Anes, Leventhal & Snyder, PLLC
- Relin, Goldstein & Crane
An Answer must be filed to the lawsuit. An answer should be prepared pursuant to the New York Rules of Civil Procedure, should be filed with the proper court, and a copy submitted to the creditor's law firm. The contents would usually include:
- General Denials (or specific admissions and denials); and
- Affirmative Defenses;
- Any applicable counterclaims. By hiring an experienced attorney at our firm, you could rest assured that your lawsuit answer will be responded to comprehensively.
Examples of Affirmative Defenses in NY:
- Accord & Satisfaction; Barred by Statute of Limitations; Laches; Failure to State a Cause of Action
WILL HARDSHIP PROTECT ME FROM A LAWSUIT?
When a lawsuit is brought, the court will ultimately look to the evidence to determine whether the debt is due and owing. Some people make the mistake of responding to the lawsuit by calling the creditor's attorney to explain to them their hardship. Hardship is not a defense to a lawsuit, and a phone call is not a sufficient response to a summons and complaint. Hardship, by itself, will not protect a defendant from judgement. However, sometime after submitting an answer which complies with the NYCPLR, our attorneys may share the borrowers hardship with the agents for American Express in order to help negotiate a debt reduction.
In one instance, we were contacted by a gentlemen that was seeking assistance for his elderly mother. He pleaded with the collectors hired by Amex that they should understand that his mother is:
- beyond 90 years of age;
- lives in a nursing home;
- does not own real estate;and
- earns a modest fixed income from pensions which are fully exempt from collections.
Nonetheless, they brought suit against her for approximately $11,000. After litigating the matter for some time, it was settled for a substantial reduction, with payments starting at $100 per month, and increasing periodically until the settlement balance is satisfied (a/k/a staggered settlement). Negotiating an affordable payment plan was the most important criteria for this particular client. The point is, don't count on your financial hardship to help you avoid a pending lawsuit.
DEFENSE FROM CREDIT CARD LAWSUITS IN NEW YORK
Our attorneys understand the concerns that most face when being sued for credit card debts. We have assisted numerous client's being sued in New York with respect to resolving litigated matters brought by large banks such as American Express. Allow us to put years of experience behind defending your case. Since results vary from case to case, prior results are not indicative of our future performance. However, we work hard to achieve the best possible results for each and every client. To find out how we can assist in your situation, call us to speak and speak to our legal team.
Consumer Fraud Legal Services is the nation’s largest firm for handling consumer arbitration cases.
Our lawyers have had hundreds of cases against American Express. So we use proven legal arguments to give you the very best chance of winning or convincing the company to settle.
Past American Express lawsuits include failing to refund unauthorized transactions, unreasonable blocks or holds, hidden fees, excessive charges, deposit issues, account errors, service issues, downtime, balance errors, duplicate charges, and/or transaction problems etc. Our legal claims have been based on breach of contract, consumer fraud, as well as violation of the Electronic Funds Transfer Act (EFTA) and Regulation E.
Even with damages of less than $100, you can often recover $500+.
Unpaid American Express credit cards are not sold to debt buyers.
One of the first things to point out to people dealing with American Express accounts in collection is that they do not sell debt.
Many major credit card issuers sell off some of their credit card bills (that remain unpaid long enough) to debt buyers. AMEX does not bundle up unpaid credit card accounts to sell off as a general practice. That is not to say AMEX will always retain ownership of their delinquent debts (they have since the 70’s). Bank policies do change from time to time, and operation realities could lead to AMEX changes too. But for now, AMEX is ultimately the legal owner of your unpaid credit card account.
This is an important distinction to point out. There are situations where someone dealing with a debt buyer collecting will have additional strategies to consider.
Amex is also one of few credit card lenders of its size that has no internal recovery and collection department to speak of. That is not to say they are lacking in customer service for their credit card account holders, but that once your account is behind enough to be dropped into their collection pipeline, you are typically not going to be connected to internal AMEX collection resources. You are, more often than not, going to be routed to third party collectors that AMEX sent your account to.
If you have had financial setbacks that caused you to stop paying American Express, but your accounts are already out for collection, you are generally going to find that any payment arrangements you make, settlement offers you receive, or are able negotiate yourself, will go through the debt collector that is currently collecting for AMEX
Settling your AMEX debt with a debt collector.
The type of settlement you can realistically aim for with AMEX credit cards can depend on several things. Your account usage leading up to missing payments is sometimes part of the equation, and so is how collectable you look to the debt collector handling the account for AMEX.
Who the debt collector is can also impact your settlement opportunities. Not all American Express debt collectors are the same. Let me break this down a bit.
The most common debt collector is a working on a contingency. If they can get you to pay something through communications through the phone and mail, they get to keep a percentage of what you pay. American Express accounts can settle for as low as 35 percent of today’s balance with some of the collection agencies they use, while others may not settle for under 50 or even 60 percent.
There are files that are flagged for no settlement. Some of the reasons this may happen are:
• Your account with American Express is too new.
• Recent AMEX card cash advances.
• Amount owed consists largely of balance transfer.
• The balance owed at time of default was made up of mostly recent months credit usage, or big ticket items.
There are large debt collection law firms that pick up large blocks of AMEX accounts to collect. They will call and write to you in seemingly the same way as a third party debt collector I just described. But do not let the similarity fool you. Some of these attorney networks, like Zwicker and Associates, can and do file collection lawsuits with the courts.
Smaller local collection attorneys may contact you about your unpaid American Express card. And any collection letter you receive from an attorney with letterhead showing an address in your state, or one neighboring you, is a clear indication that your risks of being sued to get you to pay have escalated.
Settlements with attorney debt collectors for American Express accounts, whether in or out of court, tend to be at 50 percent or higher. If you appear highly collectable, and are already being sued, decent settlement percentages are harder to negotiate. If you are reading this and have recently been sued for an Amex account, post where you are at in the process in the comments below for more feedback.
What if you cannot pay or resolve your debt right now?
You mentioned you are not able to pay what is owed, and would hopefully be able to get a payment plan to only pay back what a prior debt collector offered as a settlement. Unfortunately, those lower balance settlement offers usually come with an expiration date. You can try to negotiate the same deal with the new debt collector, but they are not bound by that prior offer, and settlement amounts you can realistically target can change dramatically the more time you need to make monthly payments.
Remember that a debt collector is all about how the timing is perfect for you to go ahead and pay them. Anything you could say about how tough your finances are at the moment will circle back to what you can pay today and in the near future. Every communication from collectors is for the exclusive purpose of getting money from you. That is how debt collectors are, for the most part.
You need to be concerned with your whole financial picture, and not just this one bill. No matter what the sense of urgency you feel when you are dealing with collectors, always know your cash flow, and never agree to something you are the least bit concerned you will be able to follow through with.
Unless you are dealing with an attorney debt collector licensed in your state, or have already been sued for collection, you probably do not have a debt emergency. And while I do recommend taking advantage of some of the better offers to settle your AMEX accounts with debt collectors early on, you can only do what you can. And even if you are in late stage collections with AMEX (in the courts or about to be), you still have options to navigate the situation.
Anyone dealing with an AMEX credit card with a debt collector is welcome to post questions and concerns in the comments below for feedback.
Oh… and I should point out that not paying your AMEX credit cards may result in losing miles and other points in rewards programs, and those not paying their full balances back may not be able to get approved for American Express accounts in the future.
American Express is a major credit card company, yet recent years have seen it involved in lawsuits regarding credit card and debt collection practices.
A large 2012 case with the Consumer Financial Protection Bureau (CFPB)ended with the requirement for Amex to refund $85 to approximately 250,000 customers plus a $27 million fine. The multi-part federal investigation found that several American Express companies had violated credit card and consumer protection laws, “at every stage of the consumer experience, from marketing to enrollment to payment to debt collection” according to the CFPB.
And in 2016, American Express settled a class action claiming it was responsible for its debt-collector agents’ violations of the Telephone Consumer Protection Act (TCPA).
We’re currently investigating Amex debt collection practices, to see if a class action is needed. If you’ve had experience with unlawful debt collection by this company, and you have evidence to back it up, let us know.
Here are some kinds of behavior that state and federal laws forbid:
· Harassing you, for example by making your phone ring repeatedly.
· Sending debt collection letters that are confusing.
· Sending debt collection letters that contain misstatements or misrepresentations, such as misstating the amount of the debt, falsely claiming that the sender is lawyer, or threatening to take action that the sender can’t legally take.
· Trying to collect debts which you have already paid or which have been discharged in bankruptcy.
· Trying to collect old debts for which the statute of limitations has expired.
· Adding extra fees and charges to the amount you owe.
· Talking about your debt to third parties, such as family, friends, or employers.
· Robo-calling you on your cell phone about your debt.
· Calling you too late at night or too early in the morning, or calling you too many times.
· Refusing to stop calling when you ask them to.
· Threatening you.
Laws vary in different states, but the TCPA—which forbids robo-calls about debt to cell phones—is a federal law that applies in all fifty states.
If you’ve experienced questionable debt collection practices with an American Express company, fill out the form on this page and attach evidence, such as letters received or cell phone numbers called and dates of calls.
Why this is relevant if you’re trying to reach a settlement with American Express
Many websites offering advice on settlement of credit card accounts recommend sending “debt validation” notices to collection agencies or creditors, in theory “putting them on notice” that you are aware of your consumer rights and demanding copies of their backup documentation. There are definitely situations where a debt validation letter is appropriate and effective. However, when you are trying to settle an American Express account, it would be a major tactical mistake. The reason is because they have the documentation. It’s trivially easy for an original creditor to produce a stack of monthly statements two inches thick and mail it to you. Voila. Debt validated, and account moved to an in-state legal firm for your troubles!
The first rule in settlement with American Express is therefore to avoid any sort of tactical “games” like debt validation, which are generally unnecessary anyway. I always recommend proactive telephone contact with creditors, and American Express is certainly no exception. Get on the phone a couple of times a month and let them know about your situation. Be aware that you’ll hear various kinds of options presented to you depending on how far behind you are on payments. For example, if you are two payments behind, the representative will generally not discuss settlement yet and will only speak in terms of different payment options. Listen carefully to these proposals and note them down. Sometimes these alternate programs can include low interest rates and lower monthly payments, and for some consumers this level of relief alone may provide sufficient breathing room to get a handle on their financial situation.
If you’re more than three payments late, the odds are good that you’ll be hearing from an outside collection agency. It’s quite common for American Express to assign their accounts to third-party collection agencies well before the point of charge-off at 180 days late, often as early as 90 days late. Don’t panic if this happens! Understand that the majority of settlements with American Express are negotiated through these third-party collection agencies.
Achieving a settlement with any creditor is a matter of balancing RISK versus SAVINGS. You’re in a financial crisis and want to obtain as deep a discount off your balance as possible, but you also have to be mindful of the legal risk that mounts whenever you are behind on payments with a creditor. One important tip for determining the risk factor is to assess WHERE the assigned collection agency is located. If they are not a law firm and they are in some other state than yours, then the situation is low risk compared to assignment to a law firm in your state. American Express is not a “bluff” creditor, so we do take any legal threats from them seriously once a file has escalated to placement with a collection attorney firm (licensed to operate in the client’s home state). In such situations, the risk is greater, so we accept a higher figure than we might otherwise. Where the risk is lower, we can hold out and try to do better on the settlement percentage.
Let’s say you are talking with a third-party agency in a different state and they have agreed to a 40% settlement. You are happy with the result and you can fund the settlement ok. The one unbreakable rule in debt settlement is to GET IT IN WRITING FIRST, before you pay! You must have a letter in-hand before you make payment on your settlement. There are NO exceptions to this rule.
A faxed copy is fine, and in fact most settlement letters are just fax copies of the agreement. This isn’t a matter of “trust,” or “distrust.” It’s just simple common sense that any agreement modifying your contract with American Express (or any other creditor) must be in writing. If you have a debt collector balking at putting the settlement in writing, then just put your foot down and insist that you will only proceed on the basis of a written agreement letter. It doesn’t have to be long! It just has to cover the essentials – the account number, amount of settlement to be paid, any payment installments listed clearly with due-dates, and the transaction has to be defined or referred to as a “settlement,” or “settlement-in-full.” Simple enough!
With your letter in hand, then you can make your payment. Cashier’s check by Federal Express is one method, but you want to be sure that you’ve coordinated payment method with the agency. Most of them prefer check-by-phone or electronic check (same thing). This is also called an ACH transaction, and it means you provide them the bank routing number and account number off your checking account. If you have it in writing first, it’s ok to do this. If you are negotiating settlements with multiple creditors, it’s better to set up a special checking account for this purpose. That way you can react quickly in case anything goes amiss.
Take the high road and negotiate in good faith with your creditors. Don’t play games or make up stories about your situation. If you are in a financial crisis, that is enough, and you just need to be patient and persistent. Start out with an offer around 20-25% of what you owe, but state this in terms of a dollar amount. You are aiming for a financial outcome that you can live with, not a world-record low percentage. As the negotiation proceeds, resist your initial urge to jump your offer right away, and give it some time to see how things go first. You can always increase later. The first offer you receive from an agency will rarely be the best offer available, no matter how convincing the explanation that this is “the best we can do.”
Over time, and with a series of negotiation calls, it’s possible to reach a settlement agreement on your American Express card that you can handle. Don’t be greedy. Once you reach your goal, accept the settlement and take the deal off the table. If you’re like most clients, you’ll feel a tremendous sense of empowerment at achieving a successful settlement. It can be a huge game changer financially, as well emotionally.
If you’re drowning in debt and want some expert advice and coaching as you negotiate through your settlements, please visit us at ZipDebt.com. We offer training and coaching programs for every budget, and our mission is to help you negotiate effectively and settle your debt accounts quickly and safely.
There is no reason why Amex should give you even 30 months to repay the debt. The American Express cardholder agreements I’ve seen often say the account balance needs to paid in full by the due date. Some accounts made allowances for payments.
In fact the cardholder agreement is specifically what you need to look at to determine if Amex is doing anything you did not agree to.
If you defaulted on your cardholder agreement, American Express is certainly entitled to use the law to sue you to collect. You are free to use the law to protect you from suit and deal with the debt. In your case you would need to seek the protection offered by bankruptcy to stop the suit. You can click here to find a local bankruptcy attorney and talk to them for free.
No creditor is required to accept any settlement. Any settlement must be negotiated with the creditor and both you and American Express need to come to a mutual agreement for a settlement to be reached.