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This is far more specifically about a debt obtained via fraud. The US court system categorically refuses to enforce debts obtained via fraud, regardless of how

This is far more specifically about a debt obtained via fraud. The US court system categorically refuses to enforce debts obtained via fraud, regardless of how it came about. Owe $325 on your credit card for buying a vacuum cleaner that was fraudulently misrepresented to you? Courts will not enforce the debt, hence the existence of chargebacks. There's no fundamental difference between that case and this one; the debtor was a victim of fraud, so the debt is invalid and will not be enforced. There's no slippery slope here because it's a decision firmly within the existing status quo. If you can show that the debt was obtained via fraud, you will not be made to pay it. IIRC this has specifically come up with Robinhood, where a /r/wallstreetbets user that was accidentally given excessive amounts of leverage was not pursued for the inevitable mid-five-figure account deficit that they racked up.

dragonwriter 6y ago
> This is far more specifically about a debt obtained via fraud. No, it's about a debt to obtained fairly but used to pay for something being fraudulently offered by a third party. > Owe $325 on your credit card for buying a vacuum cleaner that was fraudulently misrepresented to you? Courts will not enforce the debt, Unless the charge was fraudulent, yes, they will. > hence the existence of chargebacks. Chargebacks exist because of special legal rules applicable specifically to open-ended credit like credit cards, not a general principle that debt to one party resulting from fraud by a third party is invalid.
- ThrustVectoring 6y ago
  > No, it's about a debt to obtained fairly but used to pay for something being fraudulently offered by a third party. There's a very big difference between using credit to obtain cash to spend as payment for goods and services, and using the credit itself to pay for goods and services. If you took on a cash advance and then used that to buy a misrepresented vacuum, you're still on the hook for the cash advance. Student loans are not a cash advance, they're an agreement to undertake a debt in exchange for a specific education. If that education was fraudulently misrepresented, the debt was simply not obtained fairly, it was obtained through fraud. > Unless the charge was fraudulent, yes, they will. The vacuum cleaner being fraudulently misrepresented makes the charge fraudulent. It was authorized under false pretenses. >not a general principle that debt to one party resulting from fraud by a third party is invalid Chase is not third-party to your credit card transactions. They're directly involved and have contracts with the merchant's processing bank governing the relationship. Every credit card transaction is an agreement of the form "I get the stuff, the merchant gets paid according to their agreement with their processing bank, and I agree to owe the credit card company some money". If the vacuum cleaner is misrepresented to you, that entire agreement is invalid due to fraud, including the obligation to pay the credit card company. The legislation enacted over chargebacks were created so that A) this class of dispute could be cheaply adjudicated by the companies involved rather than messily and with great expense via the court system, and B) to provide a streamlined way to ensure that merchants pay all the costs involved with the process.

dragonwriter 6y ago

> This is far more specifically about a debt obtained via fraud. No, it's about a debt to obtained fairly but used to pay for something being fraudulently offered by a third party. > Owe $325 on your credit card for buying a vacuum cleaner that was fraudulently misrepresented to you? Courts will not enforce the debt, Unless the charge was fraudulent, yes, they will. > hence the existence of chargebacks. Chargebacks exist because of special legal rules applicable specifically to open-ended credit like credit cards, not a general principle that debt to one party resulting from fraud by a third party is invalid.

ThrustVectoring 6y ago
> No, it's about a debt to obtained fairly but used to pay for something being fraudulently offered by a third party. There's a very big difference between using credit to obtain cash to spend as payment for goods and services, and using the credit itself to pay for goods and services. If you took on a cash advance and then used that to buy a misrepresented vacuum, you're still on the hook for the cash advance. Student loans are not a cash advance, they're an agreement to undertake a debt in exchange for a specific education. If that education was fraudulently misrepresented, the debt was simply not obtained fairly, it was obtained through fraud. > Unless the charge was fraudulent, yes, they will. The vacuum cleaner being fraudulently misrepresented makes the charge fraudulent. It was authorized under false pretenses. >not a general principle that debt to one party resulting from fraud by a third party is invalid Chase is not third-party to your credit card transactions. They're directly involved and have contracts with the merchant's processing bank governing the relationship. Every credit card transaction is an agreement of the form "I get the stuff, the merchant gets paid according to their agreement with their processing bank, and I agree to owe the credit card company some money". If the vacuum cleaner is misrepresented to you, that entire agreement is invalid due to fraud, including the obligation to pay the credit card company. The legislation enacted over chargebacks were created so that A) this class of dispute could be cheaply adjudicated by the companies involved rather than messily and with great expense via the court system, and B) to provide a streamlined way to ensure that merchants pay all the costs involved with the process.