Category Archives: Credit Industry

OCC Bulletin 2014-37 – Consumer Debt Sales (August 4, 2014)

Office of the Comptroller of the Currency

This bulletin provides guidance from the Office of the Comptroller of the Currency (OCC) to national banks and federal savings associations (collectively, banks) on the application of consumer protection requirements and safe and sound banking practices to consumer debt-sale arrangements with third parties (e.g., debt buyers) that intend to pursue collection of the underlying obligations. This bulletin is a statement of policy intended to advise banks about the OCC’s supervisory expectations for structuring debt-sale arrangements in a manner that is consistent with safety and soundness and promotes fair treatment of customers.

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Source: OCC

Complaint – Moya v. JPMorgan Chase & Co., et al. (March 11, 2014)

Berger & Montague, P,C.Sacks, Weston, Petrelli, Diamond & Millstein, LLCJones Gillaspia Loyd, LLPA class action lawsuit has been filed on behalf of credit card Grossman Roth, P.A.customers of JPMorgan Chase against whom Chase obtained default judgments using allegedly robosigned and fraudulent affidavits. The lawsuit, Moya v. JPMorgan Chase & Co., et Scott + Scott, LLPal., No. 1:14-cv-20922 (S.D. Fla.), was filed in the United States District Court for the Southern District of Florida, and is brought on behalf of all credit card borrowers in the United States who have been sued by or on behalf of Chase to collect on a credit card debt and had the court enter a default judgment based on a robosigned affidavit submitted by Chase.

Specifically, the case alleges that Chase and its subsidiaries created and participated in a scheme of generating and robosigning affidavits on a mass scale that did not involve adequate controls to ensure that the information in the affidavits was correct and based on the affiant’s personal knowledge. The complaint further alleges that the affidavits were then notarized by a notary who falsely attested to witnessing the affiant’s execution of the affidavit. Chase then submitted these affidavits by the thousands to state courts in order to obtain default judgments against its credit card borrowers who were past due on their credit card bills. Once the default judgment was obtained, the complaint alleges that Chase aggressively pursued post-judgment remedies such as garnishing wages, levying bank accounts and assessing post-judgment interest.

Lawsuits with similar allegations against Chase have been filed by the California Attorney General and the Mississippi Attorney General. Under pressure from regulators, Chase halted its collection litigation operation in 2013.

“Chase has profited from its abuse of the legal system,” said Shanon J. Carson of Berger & Montague, P.C., one of the attorneys representing the plaintiff. “It is ironic that Chase would hold borrowers to the letter of the law in fighting collections, but has attempted to use its power and resources to obtain an unfair and unjust advantage against its customers, which must be addressed.” “This practice is widespread,” said Joseph Cohen of Scott + Scott, Attorneys at Law, LLP, who also represents the plaintiff. “A company of Chase’s size and sophistication either is or should be aware that its scheme was unlawful. We look forward to vindicating the rights of credit card borrowers who have been subject to these wrongly-obtained default judgments.” Edward Millstein of Sacks Weston Petrelli Diamond & Millstein LLC, also representing the plaintiff, said “the relief sought in this lawsuit will bring justice to thousands of borrowers. Borrowers who have been affected by Chase’s robosigning policies and practices should be made aware of their rights.

The lawsuit seeks an order by the court requiring Chase to cease using robosigned affidavits, and provide notice to class members of Chase’s misconduct so borrowers can take steps to reopen their cases and expunge the default judgments. The lawsuit further seeks reimbursement of all monies unlawfully taken by Chase following the default judgments such as through wage garnishments, attachment of bank accounts, and asset seizures.

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Source: Berger & Montague, P.C.

Complaint – State of Mississippi v JPMorgan Chase & Co. (December 17, 2013)

Mississippi Attorney GeneralIn a complaint filed in state court December 17, 2013, Mississippi Attorney General Jim Hood accused JPMorgan Chase & Co., of making false demands for debt, filing unverified documents in court and selling debt to others backed by false affidavits.

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Complaint – California v. JPMorgan Chase & Co., et al. (May 09, 2013)

California Attorney GeneralOn May 9, 2013, Attorney General Kamala D. Harris filed an enforcement action against JPMorgan Chase & Co. (Chase) alleging that the bank engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians.

The suit alleges that Chase engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.

“Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers,” Attorney General Harris said. “This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California’s courts with specious lawsuits against consumers. My office will demand a permanent halt to these practices and redress for borrowers who have been harmed.”

From January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California. On one day alone, Chase filed 469 such lawsuits in California. The Attorney General’s complaint against Chase alleges that, to maintain this pace, Chase employed unlawful practices as shortcuts to obtain judgments against California consumers with speed and ease that could not have been possible if Chase had adhered to the minimum substantive and procedural protections required by law.

“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,” the complaint states.

Chase used California’s judicial system as a mill to obtain default judgments, the suit alleges, using illegal tactics to flood the state’s court system in order to secure default judgments and garnish wages from Californians.

The alleged misconduct includes:

  • Robo-signing: Chase illegally robo-signed various litigation filings, including sworn documents, declarations, and verified complaints, without reviewing the relevant files or bank records or even reading the documents before signing.
  • “Sewer Service”: Chase failed to properly serve notice of debt collection lawsuits against consumers while claiming they had been served as required by law. This practice, known as “sewer service,” deprives the consumer of any notice of the lawsuit.
  • Filing Irregularities: Chase haphazardly assembled its official legal filings. For example, Chase failed to redact consumers’ personal information in attachments to filings, potentially exposing them to identity theft and in violation of California law. In addition, when asking courts to enter default judgments against consumers, Chase consistently swore under penalty of perjury that the consumers were not on active military duty. In fact, Chase never checked. This deprived servicemembers of important legal protections to which they are entitled while on active duty.

The suit was filed in Los Angeles Superior Court.

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Source: California Attorney General