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Chase Accused of Robo-Signing Abuses in Credit Card Collections

(Photo: Kristen Cavanaugh)

(Photo: Kristen Cavanaugh)

Matt Reynolds, Courthouse News Service

Chase Bank abused “tens of thousands” of Californian credit cardholders in a robo-signing “debt collection mill,” demanding payment “on patently insufficient evidence,” California’s attorney general claims in court.

The People of California sued JPMorgan Chase & Co., Chase Bank USA, and Chase Bankcard Services, in Superior.
Attorney General Kamala Harris wants Chase enjoined from unfair collection practices, civil penalties of $2,500 for each violation of California Business and Professions Code, and restitution for thousands of people.

“Defendants have committed debt collection abuses against tens of thousands of California consumers,” the complaint states. “For years, defendants have flooded California’s courts with collection lawsuits against defaulted credit card borrowers based on patently insufficient evidence – betting that borrowers would lack the resources or legal sophistication to call defendants’ bluff. Rather than follow basic procedures to ensure fundamental fairness to California consumers, defendants have run a massive debt collection mill that abuses the California judicial process to obtain default judgments, writs of execution, and wage-garnishment orders on the backs of lawsuits that cannot withstand scrutiny. At nearly every stage of the collection process, defendants have cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits.”

The attorney general says Chase sued a “staggering” number of Californians using a few in-house lawyers. The bank filed 10,000 lawsuits between January 2008 and April 2011: an average of more than 100 lawsuits per day.

“Some days were more frenzied than others. For example, defendants filed 469 lawsuits on Apr. 1, 2010, and then followed it up with 226 lawsuits the next day. In addition to the lawsuits filed by defendants’ in-house lawyers, outside firms retained by defendants to assist with collections filed another 20,000 cases against California consumers between January 2008 and April 2011,” the complaint states.

“To maintain this breakneck pace,” Chase ignores minimal “substantive and procedural protections required by law,” California says.

“At the heart of defendants’ unlawful conduct is the rampant use of ‘robo-signing’ – a practice of signing declarations, affidavits, and other documents in mass quantities, typically hundreds at a time, without any knowledge of the facts alleged in the document and without regard to the truth or accuracy of those facts; robo-signing has infected all aspects of defendants’ unlawful debt collection practices – from pre-lawsuit correspondence, to litigation in California courts, to affidavits provided to purchasers of defendants’ debt for filing in third-party collection lawsuits against consumers,” the complaint states.

Not only are the amounts claimed often inaccurate, Chase uses “low-level” Chase BankCard Services employees as “declarants” to verify and sign complaints they’ve never seen, the state says. Under law, a Chase assistant treasurer and officer should sign court documents.

Chase falsely represents to courts that consumers have been personally served, “when, in fact, he or she was not served at all – a practice known as ‘sewer service,'” the attorney general says.

“(T)o more quickly generate seemingly legitimate process-server returns, defendants often file proofs of service that bear only a digitally applied facsimile of the declarant’s signature, instead of the declarant’s original, ‘wet-ink’ signature, as required for documents signed under penalty of perjury,” the lawsuit states.

Faced with these tactics, debtors often do not show up in court to defend themselves. The bank seeks default judgments by again using a low-level employee with no knowledge of the debtor’s account to confirm the amount owed.

Though Chase says it does not go after military service members or veterans, it never investigates debtors to determine whether or not they have been served, the state claims.
Chase Bank did not immediately respond to a request for comment.

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