State of Minnesota
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Attorney General
Lori Swanson


Minnesota Attorney General's Office

1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101

(651) 296-3353
(800) 657-3787

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Press Release

Wednesday, January 8, 2014

ATTORNEY GENERAL LORI SWANSON SUES MINNESOTA DEBT BUYER FOR CHARGING PEOPLE 21.75 PERCENT INTEREST THEY DID NOT OWE
In Some Cases, Bradstreet Got Minnesota Courts to Enter Judgments Against Unrepresented People for the Unlawfully High Interest by Representing that the Interest Was Owed

Minnesota Attorney General Lori Swanson today filed a lawsuit against Bradstreet & Associates, LLC, a Minnesota debt buyer, for charging people up to 21.75 percent annual interest they did not owe on old bank accounts sold and charged off by two large national banks. In some cases, 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 six percent statutory rate of interest allowed by Minnesota law.

“Companies have the right to collect legitimate debt, but they shouldn’t charge people for interest that isn’t owed, nor should they get courts to award judgments against unrepresented people for interest that isn’t owed,” said Attorney General Swanson.

Bradstreet purchased old overdrawn demand deposit account debt from another debt buyer, which purchased the debt from Wells Fargo and US Bank. Both Wells Fargo and US Bank charged their customers fees, but not interest, on overdrawn checking accounts, and their contracts with their customers did not allow interest to be charged on overdrawn funds or the associated fees. Bradstreet nevertheless charged consumers interest of up to 21.75 percent from the date the accounts were charged off by the banks, with no contractual right to do so. Unless the contract authorizes a higher rate, Minnesota law caps the allowable interest rate at six percent. A significant portion of the debt sold by the banks constituted bank fees.

Since 2009, Bradstreet and its predecessor (Bridgestone & Associates, LLC) purchased at least $18 million of demand deposit account overdraft debt that originated with Wells Fargo and US Bank.

In some cases, the unlawful interest increased a consumer’s debt by thousands of dollars. For example, one consumer owed the bank $1,886.20, but after Bradstreet charged 21.75 percent interest for nearly five years, her alleged debt increased to $4,033.72.

As noted above, in some cases, Bradstreet got courts to enter judgments against unrepresented people at the full 21.75 percent rate of interest, even though the underlying bank contracts did not allow it. In 2013, the Minnesota Legislature—at the urging of the Attorney General—enacted a law to require debt buyers seeking default judgments in court to substantiate through admissible evidence that they are suing the right person for the right amount. The law became effective on September 1, 2013. Attorney General Swanson said: “We will watch to see if the new law deters debt buyers from asking courts to award default judgments against unrepresented people with scant, incorrect, or manufactured evidence.”

The State’s lawsuit was filed in Hennepin County District Court and seeks injunctive relief and restitution for consumers.

People may report complaints about Bradstreet or other debt buyers to the Minnesota Attorney General’s Office by calling (651) 296 3353 or (800) 657 3787. People may also download a Complaint Form from the Attorney General’s Office website at www.ag.state.mn.us and mail the completed form to the Attorney General’s Office at: 1400 Bremer Tower, 445 Minnesota Street, St. Paul, MN 55101 2131.

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