JPMorgan Chase & Co.
), there seems to be no respite from legal problems.
Recently, Calif.'s Attorney General (AG) sued the company for
using unlawful means to collect credit card debts.
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
To read this article on Zacks.com click here.
The lawsuit - filed in Los Angeles Superior Court - alleged that
JPMorgan filed thousands of credit card debt collection cases
every month between Jan 2008 and Apr 2011. These cases were filed
using a flawed process that shortened procedures from the
standard prescribed by Calif. law.
The AG accused JPMorgan of cutting short every stage of the
credit card debt collection procedure in order to save cost and
speed up debt collections. Allegedly, the company sued
borrowers with the help of inadequate evidences.
Moreover, JPMorgan failed to inform customers that they had been
sued, while at the same time showing customers to have been
served with court papers as per law. The AG claimed that JPMorgan
had used the 'robo-signing' method to file cases, whereby the
company executives signed case files without examining the
appropriate documents or bank statements.
Additionally, JPMorgan allegedly failed to remove borrowers'
personal information from the public domain, thereby violating
the state law and making customers vulnerable to identity theft.
The company, without verifying, certified that the debt
collection cases were not against any active military personnel.
This put members of the military in a disadvantageous position
for getting proper legal protection.
The AG is demanding a total ban on such unlawful practices, along
with compensations for customers who were harmed due to these
wrongful cases. The lawsuit stated that JPMorgan should be fined
$2,500 for every violation of the state law and an extra $2,500
for each defiance involving senior citizens or disabled persons.
This is the first lawsuit filed in the debt collection process.
The AG's office is probing the issue on a larger scale and many
other banks could face similar lawsuits.
Other banks including
Bank of America Corporation
Goldman Sachs Group, Inc.
) are facing an increasing number of lawsuits related to their
conduct preceding the financial crisis. At the same time,
investigations are in progress.
For JPMorgan, this lawsuit could dent its financials and result
in higher litigation expenses. However, for the customers who
were wrongfully sued by the company, it will restore their
confidence in the federal laws to some extent.
Currently, JPMorgan carries a Zacks Rank #2 (Buy).