Judge To Bill Collectors: Courtroom Is Not A "Land Of Oz!"

From a May, 2010 story in The New York Times:

• As New Yorkers have tumbled into credit card debt in large numbers during the great recession, bill collectors have inundated the courts to get what they say is due. In turn, the courts have issued hundreds of thousands of orders against residents. Some consumer groups argue that by doing so, the courts have become little more than an arm of the debt collection industry.



• Now, a few judges in New York State are suggesting that they agree, at least in part, with the consumer groups. They have fumed at debt collectors and their lawyers, scolding them for interest as high as 30 percent a year and berating them for false statements and abusive practices.



• Some of the rulings have even been sarcastic or incredulous. In December, a Staten Island judge said debt collectors seemed to think their lawsuits were taking place in a legal Land of Oz, where everyone was supposed to follow anticonsumer rules invented by some unseen debt-collection wizard.

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• In the Staten Island case, the judge, Philip S. Straniere, said a credit card company was claiming interest of 28 percent on the balance due, which would be illegal as usury under New York law. The company argued that the credit card issued to a New Yorker that seemed to be from a national company had actually been issued by a one-branch bank in Utah, which had no usury law.



• “Like the Land of Oz, run by a Wizard who no one has ever seen,” Judge Straniere wrote, “the Land of Credit Cards permits consumers to be bound by agreements they never sign, agreements they may never have received, subject to change without notice and the laws of a state other than those existing where they reside.”(1)



• The judge ruled that the supposed agreement allowing unlimited interest charges was not enforceable in New York.(2)

For the story, see In New York, Some Judges Are Now Skeptical About Debt Collectors’ Claims.

For Judge Straniere's ruling, see American Express Travel Related Services Company, Inc. v. Assih, 2009 NY Slip Op 29527 (NYC Civ. Ct., Richmond Cty., 2009).

(1) Commenting on the rules governing the consumer credit and debt collection industries, Judge Straniere makes this observation:

• Having dealt with thousands of consumer credit cases over the years the court is sometimes caused to wonder if the regulations governing this industry originated in the "Wonderful Land of Oz" and not in the legislature of the various states and national government.

(2) Judge Straniere gave the lender the kiblosh on the usury issue with this remark:

• The Wizard in the "Wizard of Oz" warned Dorothy and friends, "Do not arouse the wrath of the great and powerful Oz," I am sure the court will likewise be arousing the wrath of the plaintiff by finding that the credit card agreement entered into by the defendant with any of the plaintiff's entities is void as in violation of New York's usury statute.