My sister-in-law died tragically in February 2005 in Florida.
How she received “pre-approved” and “pre-qualified” loan offers from two Denver-area car dealers 17 months later is a sad commentary on America’s addiction to debt.
Of course, neither Osborn Automotive in Lakewood nor Credit Express at Burt Buick Pontiac GMC in Littleton wanted to lend money to a dead woman who never lived in Colorado. But thanks to direct marketing and an urge to lend money to folks who have gone bankrupt, they tried.
When the Osborn offer came to my home, addressed to my late sister-in-law, I called the company. I asked why they wanted to lend her $25,000.
“We have so many vehicles on our lot right now that we’re doing whatever we can to get rid of them,” the man on the phone said.
When I told him my sister-in-law was dead and had lived in Florida, he dropped the sales spiel. “That’s strange,” he said.
It is only slightly weirder than the fact that Osborn and Burt targeted my sister- in-law because she couldn’t pay her bills. More than a year before she died, personal crises forced her to declare bankruptcy. A judge discharged her from paying existing debts. As far as the car dealers were concerned, this made her a fine candidate for new debt. That, in turn, led to their embarrassing attempts to sell her a car posthumously.
Osborn’s lawyer, Charles Cuchiara Jr., apologized for the mix-up. But he said his client views loans to previously bankrupt car buyers as a consumer service that helps folks rebuild credit.
Burt’s credit resource director, Steve Hernandez, said roughly the same thing.
“Forty percent of the population is in default of some type of debt,” Hernandez said, after apologizing for the mix-up. “That doesn’t make them bad people.”
Rather, in the screwy way our economy operates, it makes them good credit risks, because the court system has allowed them to blow off old creditors.
“When a person files for bankruptcy, they can’t file again for six years,” said Cuchiara. “They have the ability to pay. We’re able to finance about 90 percent of the people who come to the dealership.”
Like Osborn Automotive, Burt got my sister-in-law’s name from a direct mail marketing company that bought a database of bankruptcy records.
“Bankruptcies are public record,” Hernandez explained.
So are death certificates. My Denver address became associated with my sister- in-law after she died, when my wife became her estate executor.
In their speed to greed, database sellers, direct marketers and the merchants who pay them don’t bother to check, said Jan Zavislan, Colorado’s assistant attorney general for consumer protection. Car dealers “send out 50,000 of these (pre-approved auto loans) hoping to get back 10 percent.”
Osborn and Burt have promised to drop my sister-in-law from their direct marketing, but spokesmen for both predicted that my wife and I will get many more solicitations for her from other businesses. Hernandez said he knows of “more than 175 database companies.”
“We routinely receive such mail addressed to our deceased clients,” Cuchiara said of his law practice.
“It’s completely ridiculous,” added Zavislan. “But there is no violation of law.”
Illegal or not, it is pathetic. Pathetic for desperate borrowers. Pathetic for businesses that exploit vulnerability at least as much as they serve consumers.
Even if the previously bankrupt don’t pay back their new car loans, odds stack heavily in favor of the auto dealers, Zavislan said. “I’ll wager that the (interest percentage) points offered on these loans is higher than what people with good credit histories pay.”
State law lets interest on car loans run to 21 percent. Dealers “make money there,” Zavislan said.
But loans to the bankrupt “are also fully collateralized. If the buyer doesn’t pay, you get the car back. So you have no fear of losing money.”
Just occasionally losing face when you solicit a corpse.
Jim Spencer’s column appears Monday, Wednesday and Friday. He can be reached at 303-820-1771 or jspencer@denverpost.com.
