In 2009, the Target National Bank sued a consumer, saying that she was delinquent on payments for her Target store credit card. Five months later, the company dropped the lawsuit, but the consumer says that the damage was already done.
According to the woman, Target filed its lawsuit based on a faulty debt affidavit that claimed she owed debts she did not really owe. Even though the company eventually dropped the debt collection lawsuit, the woman incurred legal fees in an attempt to fight it. Further, her credit score suffered because of the litigation. Her lawsuit seeks damages from the Target Corp. Additionally, it claims that other individuals suffered the same way she did.
The consumers who filed the lawsuit says that Target's practice of pursuing debt collection judgments against consumers without proper proof of the debt is illegal. She claims that if the company had not filed the fraudulent lawsuit against her, she would not have had to hire a lawyer and incur legal fees.
The lawsuit identifies a Target company employee who the woman claims is responsible for the faulty affidavit that led to the lawsuit against her. She also says that Target National Bank "took the false and misleading affidavits" in order to "secure judgments against hundreds" of other people in her situation.
If the Target employee was validating affidavits without confirming the truth of the statements contained in them, this situation could turn out to be similar to the robo-signing debacle that put thousands of foreclosures on hold. Many consumers could have been wrongly intimidated into paying debts they did not owe. Others, like the woman who filed this lawsuit, could have been forced to hire lawyers they should not have needed. The total financial impact of this situation is yet to be seen, but it does shed an interesting light on Target's debt collection practices.
Source: CNBC, "AP: Pa. woman sues over Target debt collection," 20 April 2011