California Attorney General files law suit against JPMorgan Chase
Kamala Harris, current Attorney General of California, has filed a law suit against financial services provider JPMorgan Chase seeking a $2,500 civil penalty for unlawful collection of credit card debts.
The lawsuit alleges that the bank “engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.”
Robo-signing practice involves signing legal declarations and affidavits without properly reviewing the documents. “Robo-signing has infected all aspects of . . . [JPMorgan’s] unlawful debt collection practices,” the suit said, describing the bank’s use of robo-signing as “rampant”.
The suit also accuses the bank of having its lawyers send letters to customers with allegedly defaulted credit card accounts even though no attorney has even reviewed the consumer’s file to determine if the letter is accurate, reported the Financial Times.
These lawyers threatened to make claims on property if the debt went unpaid, the lawsuit alleges. “Despite their threat to the contrary, defendants [JPMorgan] do not place liens on the consumer’s real property,” the suit adds.
The suit also alleges that the bank failed to serve its credit card customers with court summons and complaints. “At nearly every stage of the collection process, defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits,” the complaint says.
The Federal Energy Regulatory Commission warned the bank of a probable enforcement action earlier this week. The bank was also hit by regulatory orders in recent times for its involvement in London Whale incident.
JPMorgan estimates that potential losses from legal disputes could reach beyond its reserves.