Watch out, it looks like robo-signing has reared its ugly head. The State of California has filed a lawsuit against JPMorgan for violations related to tens of thousands of debt lawsuits against credit card borrowers. The bank allegedly used a number of short-cuts to process as many lawsuits as possible, including robo-signing, the infamous practice used to illegally foreclose on homeowners during the housing crisis.
As reported by CNN Money, California Attorney General Kamala Harris alleges that, between January 2008 and April 2011, JPMorgan used illegal means to quickly and systematically file more than 100,000 lawsuits against California’s for outstanding credit card debt:
- Signing off on lawsuits without checking bank records and reviewing cases for accuracy (i.e., robo-signing)
- Neglecting to notify credit card holders that they were being sued, which they are legally obligated to do
- Failing to redact personal information in court filings so as to protect borrowers from identity theft
- Certifying that none of the lawsuits were against borrowers in active military duty, without actually taking the time to verify as much
With each violation carrying a $2,500 penalty, a guilty verdict could cost JPMorgan a pretty penny. One violation at $2,500 multiplied by 100,000 lawsuits equals $250 million. However, that is likely a fraction of the potential cost if found guilty, as each allegedly illegal lawsuit probably has multiple violations associated with it.
As though this news about JPMorgan is not disturbing enough, California is widening the net, continuing its investigation of other banks for similar practices as there is suspicion these are industry-wide violations.