California Sues JPMorgan Chase for its Debt-Collection Practices

The state of California is suing JPMorgan Chase & Co. for what it says are illegal debt-collection methods against tens of thousands of California credit card consumers.

The suit, filed by Atty. Gen. Kamala D. Harris in Los Angeles Superior Court on Thursday accuses the company of “frenzied” lawsuit filings against people who fell behind on their loan repayments in California — more than 100,000 over a three-year period, between January 2008 and April 2011. The suit alleges that the nation’s largest bank ran “a massive debt collection mill” to obtain default judgments and garnish wages from the cardholders.

On one day in April 2010, JPMorgan filed 469 debt-collection lawsuits in California and then followed with 226 the next day, according to the complaint.

JPMorgan declined to comment on the lawsuit.  The suit comes just weeks prior to Jamie Dimon, the company’s chief executive, faces a vote of confidence by shareholders, many of which have questioned his leadership following the $6.2 billion trading loss the bank suffered in 2012.

California’s top prosecutor is accusing the bank of routinely “robo-signing” hundreds of legal documents “without any knowledge of the facts alleged in the document and without regard to the truth and accuracy of those facts.” That practice was widely documented in foreclosure cases which led to multi-billion-dollar settlements, including a few involving JPMorgan.

The complaint states that JPMorgan also failed to properly serve notice of debt-collection lawsuits against consumers while claiming the notices had been served, a practice known as “sewer service.”

Additionally, the complaint states, “At nearly every stage of the collection process, (JPMorgan) cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits.”

These filing irregularities failed to redact consumers’ personal information in attachments to filings, potentially exposing them to identity theft, and in violation of California law.  In addition, when asking courts to enter default judgments against consumers, Chase consistently swore under penalty of perjury that the consumers were not on active military duty. In fact, Chase never even checked this. This deprived the service members of important legal protections, which they are entitled to while on active duty.

The complaint does not specify restitution or damages but under California law, each victim would be entitled to up to $2,500 per violation, which would total $250 million. That amount could climb, because the attorney general is asking for other victims to come forward.

For more information, contact one of our Gacovino Lake attorneys at 1-800-246-HURT (4878).

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