JP Morgan Chase Getting Spanked Again for Illegal Documentation

The Financial News Network reports here that JP Morgan Chase dropped pursuit of many delinquent credit card accounts because of all its problems with phony documentation.

JP Morgan Chase was in the news in December for being sued again for credit card debt collection abuses. According to the Wall Street Journal (WSJ):

Mississippi Attorney General Jim Hood filed a lawsuit following an 18-month investigation and several months of discussions with J.P. Morgan. The complaint alleges J.P. Morgan “knowingly and willfully made false and misleading statements” while recouping old debts and filed legal documents in Mississippi that were “uncertified and lacked evidence.”

. . . J.P. Morgan, according to the complaint, pursued Mississippi consumers for delinquent amounts they didn’t owe or debts that already had been paid.

. . . Mississippi is the second state to sue J.P. Morgan for its credit-card practices. California filed a suit in May. At least 15 other states are examining how J.P. Morgan handled its credit-card-collection suits, and J.P. Morgan Chase is in early settlement discussions with 14 of them, said Iowa Attorney General Tom Miller.

Under the thin strata of consumers who did not owe or had already paid, or filed bankruptcy, are other vastly more numerous consumers who did owe, did nothing and got a default judgment or who owed, fought the court action and were defeated by phony documents and affidavits. (Robo-signed affidavits are not specifically covered in this WSJ article.)

To win a credit card debt collection case, a collection attorney can be forced to present an affidavit from a bank employee with personal knowledge of the specific debtor-consumer’s alleged credit card debt account. It has been well-documented that over the past several years Chase has been guilty of court summons for credit card debtrobo-signing thousands of these affidavits where only or a few employees claim personal knowledge of the thousands of credit card accounts.

This personal knowledge affidavit is part of consumer debt collection cases because of local courts’ rules of civil procedure.  Specifically, the business records exception to the rules of civil procedure says that instead of producing an actual live witness in court to testify to the veracity of the collecting plaintiff’s debt documents, the plaintiff only has to produce a sworn affidavit from a bank employee with personal knowledge of the that debt attesting to the accuracy of those documents.  So who is to say whether an employee actually has personal knowledge of a specific consumer’s credit card account?

I my opinion bank information management systems eliminate a sufficient number of employees involved in the handling of consumer credit card accounts to the degree that there are just too few employees to have personal knowledge of any of the millions of accounts their system handles.

Also, the affidavit (suspect as it) must actually be accompanied by some actual print-outs of the consumer’s account and contract, at least according to the rules of civil procedure, as I, a non-attorney, understand them.  In other words, the affidavit is no good by itself.

In addition to this personal-knowledge affidavit abuse, the WSJ article points out:

In Mississippi, according to the state’s attorney general, J.P. Morgan and an outside law firm didn’t file “any documentation” when seeking consumer payments in court. Instead, the bank and law firm filed “requests for admissions” that asked the consumer to acknowledge the past due amount and “relied on the fact that many consumers would not have the time, knowledge or capacity to respond to its allegations,” according to the suit.

The bank and the law firm “had no intention of actually litigating cases they filed, and either dismissed or failed to prosecute cases in which a consumer filed an answer denying the allegations,” according to the suit.

These requests for admissions are another abuse of the local rules of civil procedure. Why prove the consumer owes the debt, when you can get the consumer to ignorantly admit to it or default on the suit and get a judgment against them? A good answer to a credit card summons could be enough.

These same debt collection abuses arpracticed by many other debt collecting entities. According to a NASDAQ stock analyst blog:

Apart from JPMorgan, Couch, Conville & Blitt, a New Orleans-based law firm that was hired for collections litigation beginning 2009; Mann Bracken LLP, a now defunct firm hired for arbitration claims; and NCO Financial Systems, one of the many collection agencies, were accused in the [Mississippi] lawsuit.

What this all means for consumers who owe credit card debt they cannot afford to pay is the SCARE of a credit card debt lawsuit is a lot worse than the reality, if you are properly prepared to deal with the possibility.

Continue to educate yourself. Read more of my posts on the nature of credit card debt lawsuits and on other related credit card debt topics.

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