Chase Sued (Again) for Robo-Signing in Debt Collection

JP Morgan Chase is in legal trouble again. On Tuesday Mississippi Attorney General Jim Hood sued the mega-bank for allegedly violating consumer protection laws when going after credit card debt. The suit claims that Chase used “robo-signing” and other harmful practices for at least six years to pursue consumers for debts they did not owe, already paid or had excused in bankruptcy.

“Consumers’ paychecks were garnished and their credit damaged, making it harder for them to refinance their homes, take out a car or student loans, or even get jobs,” Hood said in a statement. “We have tried for months to resolve our concerns cooperatively, but have been forced into litigation.”

The Mississippi lawsuit accuses JPMorgan of using less-than-reputable third-party law firms to file lawsuits against consumers without first reviewing the underlying claims, and working with vendors that couldn’t keep track of customer payments. The lawsuit seeks civil penalties of up to $10,000 per violation and a ban on similar future misconduct.

Hood’s allegations largely mirror those made by California Attorney General Kamala Harris earlier this year.

The robo-signing issue is exactly what got Chase in trouble earlier this year when it entered into a consent order with the Office of the Comptroller of the Currency. Chase’s use of robo-signing brought into question the legal integrity of itsclaims against tens of thousands of consumers. The bank was also accused of failure to reconcile incorrect balances in the bank’s computer systems and collecting delinquent debts without complete or accurate records.

These investigations, and Chase’s subsequent payout, are likely to change the practices at nearly all banks. Debt collection attorneys and debt buyers are going to feel the impact most directly. Our report To the Point: The Chase Consent Order highlights the key points from our webinar about how the Chase consent order applies to debt collectors, debt collection attorneys, debt buyers and more. If you are, or would ever want to be, a vendor for JP Morgan Chase, this is compliance information you need to know. Moreover, collection agencies and debt buyers – big and small – need to be prepared for the ripple effect this will cause when working with banks and other financial institutions.

Want more webinars? Check out January’s insideCompliance: Collection Complaints – Harnessing and Responding to CFPB Scrutiny. We also have a insideCompliance 2014 subscription that guarantees you a seat at all of next year’s webinars, plus $900 in savings. Lock in your 2014 seat by January 31, and get the recording and transcript from our 2013 webinars on TCPA and UDAAP –FREE!