Chase robo-signing to collect credit card debt


So-called "robo signing" has become synonymous with the foreclosure crisis. After reports surfaced that big banks had cut corners on paperwork so they could more rapidly throw homeowners out on the street, banks like JPMorgan Chase and Bank of America got slapped with a landmark $25 billion settlement filed in federal court this week.

But according to American Banker this week, "robo signing" has also crept into the credit card debt collection game.

AB's Jeff Horwitz this week lays out how workers at Chase's San Antonio-based Credit Card Litigation Support Group took "procedural shortcuts" and used "faulty accounting records" to sue tens of thousands of delinquent credit card borrowers for at least the past two years. Horowitz also reports that the Office of the Comptroller of the Currency, the federal regulator overseeing banks, is investigating flawed debt collection practices at the bank's San Antonio credit card operations center -- according to bank employees, he reports, OCC enforcement staffers spent two months here gathering info on the bank's credit card operations late last year.

When Chase and other banks sue customers delinquent on their debts, they have to submit affidavits in court documenting how much the customers owe. According to current and former bank employees cited in Horwitz's piece, Chase's paperwork regularly misstated the debts, with employees often signing court documents without verifying the claims in a rush to recoup losses.

Regarding those affidavits, Horwitz quotes a former bank employee who oversaw a team handling tens of thousands of Chase debt files in San Antonio saying, "We did not verify a single one. ... We were told [by supervisors] 'We're in a hurry. Go ahead and sign them.'"

Writes AB's Horowitz:

"The bank's errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase has already won, current and former Chase employees say.

For the banking industry at large, the situation at Chase highlights the risk that shoddy back-office procedures and flawed legal work extends well beyond mortgage servicing."

The stories from current and former bank employees back up charges made by Linda Almonte, a former mid-level executive at Chase's San Antonio credit card operation. When fired in November 2009 after six months on the job, she filed a whistleblower complaint and a wrongful termination suit against the bank, saying she was terminated for objecting to the sale of credit card debts with inaccurate balances.