California Sues Chase Over Debt Collection Practices on Credit Cards
California Attorney General Kamala Harris filed an enforcement action against JPMorgan Chase last Thursday, alleging that the bank used illegal debt collection methods, such as robo-signing, against approximately 100,000 California credit card consumers from January 2008 through April 2011.
“Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers,” Attorney General Harris said. “This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California’s courts with specious lawsuits against consumers. My office will demand a permanent halt to these practices and redress for borrowers who have been harmed.”
The action says that during the three-year period, Chase filed thousands of debt collection lawsuits every month in the State of California. On one day, Chase filed 469 lawsuits. The complaint alleges that Chase could not have filed these lawsuits with such speed and ease if it had adhered to the minimum substantive and procedural protections required by law. The suit also charges that Chase flooded the California’s judicial system in order to secure default judgments and garnish wages from Californians.
The alleged misconduct includes robo-signing of litigation filings without looking over the relevant files or bank records, “sewer service” that failed to give proper notice of debt-collection lawsuits against consumers, and filing irregularities where Chase “haphazardly” assembled its legal filings.
The suit was filed in Los Angeles Superior Court. Consumers who believe they have been victims of this misconduct may submit a complaint online.
This is not the first case of banks being charged with illegal debt collection practices like robo-signing.
A controversy 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.
In January, ten U.S. banks agreed to pay $8.5 billion to settle regulator’s accusations that they didn’t follow the correct foreclosure process and made errors in the loan process. This includes the robo-signers used to sign off on thousands of foreclosure cases instead of a personal review of each one.