Interesting news from JP Morgan Chase on Friday (6/24/2011). The bank has dropped over a thousand debt collection lawsuits pending in five different states. According to an article in The Wall Street Journal, JP Morgan Chase was owed $45.9 billion on outstanding credit card debt in California, Florida, Illinois, New Jersey and New York, the five states in which it abandoned the collection suits. That figure includes both current and delinquent accounts.
The bank would not disclose the number of cases it dismissed, or the reason it has taken this action. According to the Journal article, a spokesperson for JP Morgan would not confirm or deny the dismissals, saying that the bank considers its collection strategy proprietary information.
It is hard to avoid speculating that the reason JP Morgan Chase took this step may reflect concerns that its paperwork is insufficient to prove its cases. A local New York judge, Judge Straniere of the Richmond County Civil Court, was quoted in the Journal article stating that deficiencies in paperwork in credit card collections cases are worse than in foreclosure cases, which have received a great deal of press. “It’s a significant problem…that’s widespread and yet given virtually no attention,” said Judge Straniere. Last year, Judge Straniere dismissed 150 credit card collection cases filed by JP Morgan Chase.
A former JP Morgan Chase assistant vice president filed a whistleblower complaint with the Securities and Exchange Commission against the bank last year alleging that the bank robo-signed affidavits and otherwise mishandled account information. That case was settled in April.
Earlier this year JPMC, the country’s second largest bank by assets (which include more than $100 billion in credit card accounts), agreed to pay more than $56 million to settle claims that it overcharged service members on their mortgages and in the case of eighteen families, cases wrongfully foreclosed upon them. Active duty service members are protected by federal law from such actions.
The bank is also one of a number of banks under scrutiny for robo-signing mortgage foreclosure documents.
We’ve received quite a few stipulations of discontinuance from Chase, usually discontinued with prejudice. We’d be interested in hearing of the experiences others are having with discontinued Chase cases. It’s hard to believe that JPMC is giving up on all this potential income.