One of the nation’s largest financial institutions seems poised to be hit with massive regulatory charges from state and federal agencies over allegations that it improperly pursued what it said were delinquent and defaulted debts, and now the company, through an internal study, has admitted as much.
JPMorgan Chase recently acknowledged that it made a number of errors in suits filed against consumers over credit card balances it controlled, according to a report from the Wall Street Journal. An internal investigation into 1,000 representative cases found that about 9 percent involved some sort of mistake, though what these were varied widely. For instance, some pertained to inaccurate interest rates and fees being applied by law firms bringing the cases to trial, while other listed larger balances than what was actually owed on the account. Still more involved sworn documents signed without having been properly reviewed.
However, the bank’s internal documents characterized these issues as being “mostly small” and noted that they had “minimal” impact on consumers, as well as asserting that the company generally believed that the principal balances sought in these suits were accurate, the report said. Of course, these findings may come as little consolation to the hundreds of thousands or more consumers nationwide who were hit with lawsuits, of which more than 100,000 were filed in California alone between the start of 2008 and April 2011.
In all, 13 states are looking into the company’s debt collections efforts, and it could also be hit with an order from the U.S. Office of the Comptroller of the currency to conduct a more formal review into these issues in an effort to find more borrowers who deserve compensation as a result of potentially unfair practices, the report said. The states’ probe, however, does not include California, which has filed it own suit against JPMorgan, and could result in legal action against the lender, as well as potentially other lenders in the industry as well.
Instances of delinquency and default have been declining for some time now, however, meaning that far fewer consumers are falling behind on their credit card balances and other financial obligations. Many experts have been predicting for some time now that late payments would bottom out and begin to grow again, but they have generally defied that expectation and are now hovering near all-time lows.