The California state attorney general is suing Chase for alleged credit card debt collection abuses against more than 100,000 state residents over three years.
The suit filed Thursday with the Los Angeles Superior Court claims the bank signed court documents without verifying the information beforehand, also known as "robosigning." The practice became notorious in 2010 after it surfaced that several banks, including Chase, didn't properly confirm foreclosure filings before taking homes from mortgage borrowers.
The state attorney general, Kamala Harris, also alleges that Chase did not properly serve notices of debt collection lawsuits to consumers. The bank also failed to omit personal information on filings as required by state law, the suit claims. And it didn't verify if servicemen and women were on active military duty before getting judgments against them, according to the lawsuit.
The complaint includes debt collection lawsuits from January 2008 through April 2011.
"At nearly every stage of the collection process, defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits," the complaint states.
Chase did not have any comment on the lawsuit at this time.
California's lawsuit is just the beginning, says Bill Bartmann, CEO of debt collection firm CSF2, who submitted a white paper on credit card debt collection abuses in the industry to the White House's National Economic Council.
Bartmann says other state attorney generals are looking to file similar lawsuits against Chase, and a group of state AGs are preparing petitions against other major credit card issuers. The Office of the Comptroller of the Currency began investigating Chase last year for debt collection abuses.
The number of victims from credit card debt collection abuses could be 10 times those seen from the foreclosure robosigning scandal, Bartmann says.
"This is going to be much bigger than the foreclosure robosigning issue a few years ago," he says. "The credit card customer base is gargantuan. There could to be as many as 45 million victims."
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