The state of California has filed suit against JPMorgan Chase,
alleging the bank used illegal shortcuts when it came to thousands
of debt collection lawsuits. According to
, filed May 9, 2013, the bank circumvented California law in the
name of saving time and money to collect debt held by tens of
thousands of credit borrowers.
Among those alleged shortcuts was a tactic called
"robo-signing," a practice once rampant in mortgage foreclosures
before it was outlawed. Debt lawsuits require signed affidavits
from the entity that holds the debt before it can get default
judgments and garnish wages, swearing that it has reviewed proper
documents and is sure the claim is accurate. However, these reviews
are time-consuming -- and, JPMorgan Chase, the lawsuit alleges, had
employees sign off on thousands of cases without doing the required
That glut of cases, according to the suit, "flooded California's
courts with collection lawsuits" against credit borrowers and took
advantage of the fact that borrowers "would lack the resources or
legal sophistication to call [the bank's] bluff."
This case isn't the first time robo-signing debt lawsuits has
been criticized. Courts, regulators and consumer advocates have
become increasingly skeptical of
robo-signed credit card debt paperwork
To learn more about how robo-signing works -- and how it can
harm borrowers -- use the interactive graphic below.
Robo-signed collection cases under fire
To use the graphic on your site, use the following
alt="CreditCards.com infographic: How robo-signing works"