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California sues JPMorgan over debt collection practices

The bank allegedly used robo-signing to overwhelm courts with more than 100,000 suits against consumers

California Attorney General Kamala Harris is suing JPMorgan Chase & Co. for allegedly running a “debt collection mill” in an effort to recover credit card debt from thousands of the state’s consumers.

The suit accuses the bank of overwhelming California courts with more than 100,000 lawsuits in order to win default judgments against customers who owed the bank money. The issue, Harris says, is that the bank was only able to file the staggering number of suits by repeatedly “cut[ting] corners in the name of speed, cost savings and their own convenience.”

JPMorgan’s problematic tactics purportedly included filing incomplete or false documents to bolster its cases, disclosing consumers’ credit card numbers and failing to inform some customers that the bank was suing them. The bank also allegedly signed off on documents without thoroughly reviewing them, reminiscent of the “robo-signing” that ran rampant among mortgage lenders in the lead-up to the housing crisis.

"This enforcement action seeks to hold [JPMorgan] accountable for systematically using illegal tactics to flood California's courts with specious lawsuits against consumers," Harris said.

A JPMorgan spokesman told the Los Angeles Times that the bank stopped filing credit card lawsuits in early 2011, following a companywide review of its debt collection procedures.

Lenders around the country have been accused of using similar methods to collect outstanding consumer debts left over from the worst days of the economic crisis.

For more mortgage-related stories on InsideCounsel, see:

NY AG plans to sue Bank of America, Wells Fargo

$25 billion foreclosure settlement finalized

BofA enters multibillion dollar settlements with Fannie Mae

Fraud allegations cannot reopen voluntarily dismissed foreclosure cases

MBIA settles with Bank of America over allegedly defective mortgages

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