Consumer News, Financial & Insurance Fraud

OCC Probing JPMorgan Chase Credit Card Collections

OCC Probing JPMorgan Chase Credit Card Collections
Posted: March 13, 2012 at 4:12 pm   /   by   /   comments (2)

American Banker reports on the JPMorgan / Chase fraud:

JPMorgan Chase & Co. took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years, current and former employees say.

The alleged process flaws sparked a regulatory probe by the Office of the Comptroller of the Currency and forced the bank to stop suing delinquent borrowers altogether last year.

The bank’s errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase already has 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.

“We did not verify a single one” of the affidavits attesting to the amounts Chase was seeking to collect, says Howard Hardin, who oversaw a team handling tens of thousands of Chase debt files in San Antonio. “We were told [by superiors] ‘We’re in a hurry. Go ahead and sign them.’”

Hardin left the bank in 2010 to work in a different industry.

Company documents, court filings and interviews with seven current and former employees reveal that Chase’s credit card litigation operation allegedly was plagued by unreliable external attorneys, management’s disregard for accuracy and patchy technology.

The bank’s computer systems frequently disagreed about how much debtors actually owed, several of the Chase sources say.

The employees’ stories corroborate allegations made by Linda Almonte, a former midlevel business process executive in Chase’s San Antonio-based Credit Card Litigation Support Group. Dismissed in November 2009 after six months on the job, Almonte filed whistleblower complaints and a wrongful-termination suit claiming she was fired for objecting to the sale of credit card debts with erroneous balances.

Almonte’s complaints drew the attention of the OCC, former Chase employees say, and led to the April 2011 shutdown of a formidable collections operation that generated several billion dollars of legal judgments every year.

Few details of the OCC’s investigation are available, but current and former Chase employees confirm that staffers from the agency’s enforcement division spent two months gathering information in the San Antonio facility late last year. A person familiar with the OCC’s review says that the regulator is taking the situation very seriously.

Read the full story at American Banker.com >

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