Mississippi AG Sues JPMorgan Chase Over Debt Collections

December 18, 2013
American Banker 
debt settlement news

JPMorgan Chase pressured customers into paying debts they did not owe, sold debt already erased in bankruptcy, and overlooked frequent errors by third-party collections attorneys, according to a lawsuit filed by Mississippi Attorney General Jim Hood.

JPMorgan's credit card debt collections business was disbanded in 2011. That spring, a probe by the Office of the Comptroller of the Currency (OCC) challenged the legitimacy of JPMorgan's collections lawsuits; it ended in September, when the OCC ordered the bank to repay customers and reform its collections.

Hood accuses the bank of "egregious" lapses, including violations of the Servicemembers Civil Relief Act. Bank executives allegedly knew of many of the problems but continued to turn out faulty lawsuits to try to obtain uncontested judgments. Even after being reprimanded for similar errors in handling defaulted mortgages, the bank's collections business allegedly continued to engage in robo-signing of legal documents, subpar legal work, and inadequate recordkeeping.

JPMorgan's consumer debt collection has prompted not only the consent order with the OCC but also a civil suit by California and investigations in 14 other states. The bank allegedly set collections quotas for employees, dismissing those who could not meet them, and used outdated recordkeeping systems for customer accounts. Hood is seeking up to $10,000 from the bank for each violation of Mississippi's Consumer Protection Act -- such as quoting inaccurate debt amounts to customers and failing to investigate credit bureau disputes -- plus compensation for the state's legal costs. The suit also alleges violations by the New Orleans-based law firm Couch, Conville & Blitt, which JPMorgan used for collections litigation beginning in 2009; and Mann Bracken LLP, a now-defunct law firm used for arbitration claims through mid-2009.

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