State and federal regulatory bodies have been cracking down on unfair or even deceptive lending practices from financial institutions for some time now, and the state of California recently became the latest to level charges against a credit card issuer.
California Attorney General Kamala Harris recently announced that the state filed a suit against JPMorgan Chase alleging that it engaged in fraudulent and unlawful practices in collecting debts from about 100,000 state residents, according to a report from her office. Specifically, the case involves the potential use of widespread and illegal robo-signing actions from January 2008 to April 2011.
“Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers,” 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.”
Chase filed 469 debt collections cases on one day alone during the period in question, and routinely sent thousands to court every month, the report said. As a means of maintaining this high pace, the suit alleges that Chase did not properly review the cases of the people being taken to court, and illegally signed off on sworn documents, declarations and verified complaints without reviewing files or bank records.
Further, the suit claims that the company did not properly inform those who were being hit with such lawsuits that they were being taken to court, which is required by law, the report said. It also asserts that Chase did not properly compile or prepare all the necessary documents for such legal filings, leaving sensitive information un-redacted and not reviewing whether some of the people being sued were actively serving in the U.S. military. There are certain legal protections from such cases for military members that were therefore breached, the suit claims.
Robo-signing was also popular in the mortgage industry for some time, as many lenders were dealing with so many instances of delinquency and default that they had to illegally streamline their approval processes in order to take care of all of them. This led to companies not properly reviewing the necessary documents before signing off on a foreclosure, and millions might have faced this hardship without their actually deserving to do so.