California Attorney General Kamala Harris has Thursday filed an enforcement action against financial services giant JPMorgan Chase & Co. (JPM) for alleged engaging in fraudulent and unlawful credit card debt-collection practices against tens of thousands of Californians. The announcement was made in a release by the Attorney General's office.
"Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers. This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California's courts with specious lawsuits against consumers," Harris said in a statement.
The lawsuit, filed in Los Angeles Superior Court, alleging that JPMorgan Chase used illegal tactics to flood California's court system in order to secure default judgments and garnish wages from Californians.
The lawsuit alleges that JPMorgan engaged in widespread, illegal robo-signing of legal documents, among other unlawful practices, to commit debt-collection abuses against about 100,000 California credit card borrowers over at least a three-year period from January 2008 through April 2011. The lawsuit also alleges "sewer service" and "filing irregularities."
The Attorney General is seeking a permanent halt to these practices and to redress the borrowers who have been harmed by these actions of JPMorgan.
JPMorgan is alleged to have filed thousands of debt collection lawsuits every month in the State of California, with 469 such cases filed on a particular day. It has also employed unlawful practices to obtain judgments in a speedy and easy manner, which is not possible under normal procedures.
"At nearly every stage of the collection process, Defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits," Harris added.
Meanwhile, the Office of the Comptroller of the Currency is also reportedly mulling possible action against the bank for the debt collection practices, and is said to be preparing an enforcement action targeting it.
JPM closed Thursday's regular trading session at $49.04, down $0.72 or 1.45% on a volume of 18.10 million shares.
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