Is Robo-signing Being Used with Credit Card Lawsuits?
The robo-signing scandal burst onto the financial scene two years ago when a number of major U.S. banks aggressively fast-tracked foreclosure paperwork. The practice was loudly condemned and the government handed down a $25-billion dollar fine.
Robo-signing slowed, but it did not end.
Robo-signing occurs when financial documents are signed with little review or concern for accuracy. Individual details are overlooked and errors are not corrected, but the documents are signed anyway.
The scandal erupted in 2010 when GMAC Mortgage and other major banks such as Bank of America and JP Morgan Chase used temporary workers, who had little understanding of the documents, to sign on the line and pass it on. After robo-signing was revealed, banks and mortgage lenders suspended foreclosures to conduct internal investigations.
Critics say that banks did not do enough to stop robo-signing and it may have spread to other types of lenders.
The New York Times reported in August that credit card issuers may have used robo-signing in lawsuits to collect debt. There have been significant increases in the number of lawsuits that credit card issuers have brought against borrowers. Some lawsuits may have contained erroneous credit card statements, according to the judges. Some cases have dismissed the lawsuits because an employee provided generic testimony about the company’s records.