Senators investigate JPMorgan ‘robo-signing’ claims in debt collection

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Diving brief:

  • Six Democrats on the Senate Banking Committee sent a letter to JPMorgan Chase on Monday, asking for information on recent reports that the bank has resumed “robotic signing” of legal documents to speed up the review process for credit card debt collection lawsuits.
  • The Consumer Financial Protection Bureau (CFPB) issued a consent order in 2015, banning Chase from signing legal documents by robots. But after the consent order expired in 2020, the bank resumed filing a series of lawsuits against credit card customers who were in arrears, ProPublica and the Capitol Forum reported last month.
  • Chase stopped pursuing such lawsuits in 2011, after regulators said the bank was filing tens of thousands of them — sometimes exaggerating what was owed — along with short affidavits from bank employees rather than billing records from bankers. customers, according to the report.

Overview of the dive:

JPMorgan on Monday refuted claims that robot– signing of documents. Such claims are “simply untrue,” bank spokesman Tom Kelly told Bloomberg on Monday. Trained employees review each affidavit before it is filed in court, and the bank is complying with all ongoing requirements from regulators, he said.

However, six Democrats on the Senate Banking Committee wrote to the bank’s CEO, Jamie Dimon, on Monday asking Chase to “provide detailed information” regarding its credit card debt collection practices.

“The potential recovery of [robo-signing] could affect tens of millions of American families who rely on Chase for financial services,” Sens. Sherrod Brown of Ohio, Elizabeth Warren of Massachusetts, Tina Smith of Minnesota, Robert Mendez of New Jersey, Chris Van Hollen of Maryland and Raphael Warnock from Georgia wrote.

the CFPB estimated that Chase erred in about 9% of the cases it won, with judgments that “contain erroneous amounts greater than consumers legally owe”.

The senators cited that history of errors in their request Monday.

“Not only does this practice result in wage garnishment and the direct debiting of money from customer accounts for unwarranted debts, but these collections negatively impact consumers’ credit scores through credit reports. , making it harder for these consumers to get jobs, housing and affordable credit — all because of Chase’s mistakes,” the senators wrote.

Specifically, the senators asked how many Chase employees reviewed customer records in debt collection lawsuits and how many lawsuits the bank filed against credit card customers in 2019, 2020 and 2021.

Following the 2008 financial crisis, Chase and a number of other banks reportedly engaged in robotic signing to speed up foreclosure procedures.

In 2013, the bank was one of 13 financial institutions — including Bank of America, Wells Fargo and Citi — that were censured by federal regulators for allegedly signing erroneous input documents by robots.

The banks collectively paid $3.6 billion to 3.8 million borrowers and $5.7 billion in landlord assistance to settle the case. Chase had to pay $753 million into a fund for borrowers and $1.2 billion in other aid, MarketWatch reported.

The Office of the Comptroller of the Currency in 2016 fined Chase $48 million for failing to meet the terms of this mortgage service settlement, Reuters reported.

The 2015 CFPB Consent Order required Chase to disclose “relevant information and documents maintained by [the bank] to support their claims” in cases where customers have failed to respond to legal action.

This provision expired in early 2020 and the bank took over regulators of the “affidavit signing assembly line” uncovered ten years ago, ProPublica reported.

Instead of providing a customer’s complete file, Chase typically submits copies “of a few credit card statements along with a two-page affidavit certifying that the bank’s file was accurate and complete,” the publication reported.

The senators, in Monday’s letter, defined robot-signing as “the practice where important documents are reviewed and signed by persons with little or no knowledge of the matter and proper procedures are not followed”.


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