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Debt Collection Abuse Claimed in State Lawsuit Against JP Morgan

It’s not just about mortgages anymore. The fight against the unethical, illegal tactics of big banks is moving to the arena of credit cards.

The state of California has filed suit against JP Morgan Chase in the state’s Superior Court, alleging widespread debt collection abuses against thousands of consumers in California.

Our Miami foreclosure lawyers know this certainly goes far beyond the west coast, and such actions were almost guaranteed to have occurred here in Florida as well.

The lawsuit in California was filed by the state attorney general, Kamala Harris, who is alleging that between early 2008 and mid-2011, the country’s largest bank filed thousands of lawsuits monthly – just in California – to collect on credit card debt that had remained uncollected. In one day alone, records showed the firm had filed some 470 lawsuits.

This alone may not have been a violation of law, but it’s what the bank reportedly did with those lawsuits that has drawn the government’s attention. Similar to what we saw in the wake of the housing bubble with faulty foreclosures and robo-signing, the bank began to get lazy when it came to official records. In order to maintain the lightning-fast filing speed, the firm began to rely rather heavily on records that were not verified for accuracy. Some of these records were incomplete. Some were questionable with regard to their validity.

This rubber-stamping of documents necessary to feed the machine and push these cases through is exactly what landed so many banks in hot water with federal regulators sorting through the mess these banks made of the foreclosure process. That we’re seeing it here too is no major surprise.

Harris said that these “shortcuts” were made at nearly every stage of the collection process, and they served to reduce the bank’s own costs and time expenditures – regardless of whether the actions were fair to consumers. Certainly, these actions weren’t even in good faith.

Harris was quoted as saying that a vast number of the cases were filed speciously, meaning they appeared to be plausible, at least superficially, but in reality, were misleading. The tactics used to push these cases through, Harris said, were illegal. The state’s efforts were carried out with the specific goal of seeking redress for harmed borrowers.

While JP Morgan is the one being targeted in California and federal regulators right now, there is ample evidence that other banks have been employing similar actions throughout the country. One civil court judge from Brooklyn, who says he’s presided over some 150 of these cases daily, said in the majority of these cases, the bank can’t prove that the person indeed owes the debt of which they are accused of defaulting.

The reason we’re seeing so many of these cases now – despite the fact that fewer customers overall are defaulting – is that banks are seeking to wipe those bad loans off the books.

Unfortunately, unlike foreclosure cases, banks are winning the majority of these credit card lawsuits simply by virtue of the fact that defendants aren’t showing up to court to fight the allegations. So even though many of these consumers have solid ground on which to challenge the bank’s claims, banks have been awarded a default judgement in about 95 percent of the cases.

While we’d like to see the same consumer protection focus here in the Sunshine State, we aren’t holding our breath. Unfortunately, Florida Attorney General Pam Bondi has not sided with consumers on such issues, when her office has taken any action at all.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

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