As federal regulators are gearing up to issue sanctions against J.P. Morgan Chase & Co. for a litany of mistakes the financial giant made while collecting old debts, an internal review by the firm has proven what has already been alleged.
Our Miami consumer rights lawyers understand that the bank analyzed some 1,000 lawsuits filed against credit card debtors. Of those, about 9 percent were found to have significant errors.
Those mistakes reportedly ranged from wrongly-applied fees and interest to some cases in which the listed balances were higher than what was actually owed, according to The Wall Street Journal.
Of course, the bank has tried to downplay these errors as “minimal impact” and “mostly small.” That may be true from the perspective of a multibillion dollar corporation. But as any individual who has had to go toe-to-toe with the bank in court will tell you, it’s typically no small matter. You figure in not only the debt at the core of the dispute, but also the costs incurred for legal fees and time spent on the case, it all adds up very quickly.
These abuses eerily reflect the problems associated with the robo-signing scandal that plagued the housing market. It would never have to light, either, if former Chase Vice President-turned-whistle-blower Linda Almonte would never have stepped forward. She was fired for shedding light on these problems, and has since filed a civil lawsuit against the company.
Today, 13 states and the Office of the Comptroller of the Currency are investigating the bank. Some have outright accused chase of unlawful and fraudulent methods. California has even filed a lawsuit against the bank alleging problems with some 100,000 credit card debt collection lawsuits in that state alone.
The agency halted its credit card debt collection lawsuits back in 2011 after the allegations first emerged.
So why was Chase so sloppy in the first place? Because it is easier to sell debt to a second-hand collector if a court judgment for payment has already been obtained. That meant that Chase was willing to go to extraordinary lengths – perhaps even break the law – in order to get those judgments. The vast majority of these people never fought back in these cases, so many may not realize that the lawsuit against them was full of mistakes. In fact, we believe Chase was counting on that. And you can bet Chase likely wasn’t the only one, though it’s the only firm that has so far been caught.
We would also venture a guess that the 9 percent error rate determined by the bank is likely a severe understatement. The problems are likely much more widespread.
Consider the results of Chase’s mistakes regarding foreclosure case errors. The consulting firm hired by the bank had analyzed more than 60,000 foreclosure lawsuits. Of those, the consultant estimated about 1 percent were flawed, affected by the robo-signing scandal. However, independent reviews revealed error rates that were much higher, at between 9 and 11 percent.