California Attorney General Kamala Harris Thursday announced that her office has filed an enforcement action against JPMorgan Chase & Co. alleging that the bank engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians.
The suit alleges that Chase engaged in widespread robo-signing of court documents in debt collection cases, among other practices, to commit abuses against approximately 100,000 California credit card barowers over at least a three-year period.
“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.”
Harris alleged that from January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California. The complaint against Chase alleges that, to maintain this pace, Chase employed unlawful practices as shortcuts to obtain judgments against California consumers with speed and ease that could not have been possible if Chase had adhered to the minimum substantive and procedural protections required by law.
The central issue is the use of affidavits to prove that the debt belonged to the consumer being sued, and the alleged practices employed by Chase to produce the documents. Chase allegedly robo-signed various litigation filings, including sworn documents, declarations, and verified complaints, without reviewing the relevant files or bank records or even reading the documents before signing.
The issue of robo-signing documents in debt collection lawsuits has been prominent among debt buyers for the past couple of years, and before that, among mortgage companies in foreclosure proceedings.
Chase has also faced similar questions before regarding its legal collection channel. Last year, a series of articles in American Banker detailed an investigation by the U.S. Office of the Comptroller of the Currency that looked into the bank’s affidavit process.
In addition to the improper legal documents allegations, Harris charged that Chase failed to properly serve notice of debt collection lawsuits against consumers while claiming they had been served as required by law.