- Six Democrats on the Senate Banking Committee sent a letter to JPMorgan Chase on Monday, requesting information about recent reports the bank has resumed "robo-signing" legal documents to speed up the review process in credit card debt collection lawsuits.
- The Consumer Financial Protection Bureau (CFPB) issued a consent order in 2015 prohibiting Chase from robo-signing legal documents. But after the consent order expired in 2020, the bank resumed filing a barrage of lawsuits against credit card customers who were behind on payments, 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 overstating what was owed — accompanied by short affidavits from bank employees rather than customer billing records, according to the report.
JPMorgan on Monday refuted claims that it is robo-signing documents. Such allegations are "just false," Tom Kelly, a spokesman for the bank, told Bloomberg on Monday. Trained employees review every affidavit before they are filed in court, and the bank complies with all ongoing requirements from regulators, he said.
However, six Democrats on the Senate Banking Committee wrote the bank's CEO, Jamie Dimon, on Monday, asking Chase to "provide detailed information" regarding its credit card debt collection practices.
"The potential resumption 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 Menendez of New Jersey, Chris Van Hollen of Maryland and Raphael Warnock of Georgia wrote.
The CFPB estimated Chase made mistakes in about 9% of cases it won, with judgments that "contained erroneous amounts that were greater than what the consumers legally owed."
The senators cited that history of errors in their request Monday.
"Not only does this practice result in wage garnishing and taking money directly out of customers’ accounts for wrongful debts, these collections negatively impact consumers’ credit scores through credit reporting, making it more difficult for those consumers to obtain jobs, housing, and affordable credit — all due to Chase’s mistakes," the senators wrote.
Specifically, the senators asked how many Chase employees reviewed customer files in debt collection lawsuits, and how many lawsuits the bank filed against credit card customers in 2019, 2020 and 2021.
In the wake of the 2008 financial crisis, Chase and a number of other banks allegedly engaged in robo-signing to speed up foreclosure proceedings.
In 2013, the bank was one of 13 financial institutions — also including Bank of America, Wells Fargo and Citi — that were censured by federal regulators for allegedly robo-signing erroneous foreclosure documents.
The banks paid a collective $3.6 billion to 3.8 million borrowers and $5.7 billion in assistance to homeowners to settle the case. Chase was required to pay $753 million in a fund for borrowers and $1.2 billion in other assistance, MarketWatch reported.
The Office of the Comptroller of the Currency in 2016 fined Chase $48 million for failing to meet the terms of that mortgage servicing settlement, Reuters reported.
The CFPB's 2015 consent order required that Chase divulge "relevant information and documentation maintained by [the bank] to support their claims" in cases where customers did not respond to a lawsuit.
That provision expired at the start of 2020, and the bank resumed the "affidavit-signing assembly line" regulators uncovered a decade ago, ProPublica reported.
Instead of providing a customer’s full record, Chase typically submits copies "of a few credit card statements with a two-page affidavit attesting that the bank’s record were accurate and complete," the publication reported.
The senators, in Monday's letter, defined robo-signing as "the practice where important documents are reviewed and signed by individuals with little to no knowledge about the case and proper procedures are not followed."