California's attorney general sued JPMorgan Chase & Co on Thursday, accusing the company of falsely signing documents to unlawfully collect credit card debt from thousands of customers.
The lawsuit accuses JPMorgan of engaging in widespread, illegal "robo-signing" of legal documents to commit debt-collection abuses against approximately 100,000 California credit card borrowers.
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JPMorgan "flooded California's courts with collection lawsuits against defaulted credit card borrowers based on patently insufficient evidence," according to the lawsuit, filed in Los Angeles Superior Court.
The company "bet that borrowers would lack the resources or legal sophistication to call bluff," the lawsuit said.
In the foreclosure industry, robo-signing is the practice of a bank employee signing thousands of documents and affidavits without verifying the information contained in the document or affidavit.
Paul Hardwick, a JPMorgan spokesman, said in an email that the company did not have any comment at this time regarding California's credit-card lawsuit.
"Robo-signing" first gained prominence after the housing bubble burst in 2008, when it emerged that banks across America evicted people from their homes with false or incomplete documentation.
JPMorgan was one of the five largest U.S. banks which agreed to a combined $26 billion settlement with state authorities in February 2012 over foreclosure abuses.
In Thursday's lawsuit, Kamala Harris, California's attorney general, alleges that JPMorgan filed thousands of debt collection lawsuits in California between January 2008 and April 2011 by running "a massive debt collection mill".
In a statement, Harris said: "Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers. This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California's courts with specious lawsuits against consumers."
Among fraudulent debt collection actions, the lawsuit states that JPMorgan "illegally robo-signed" various litigation filings, including sworn documents, declarations, and verified complaints, without reviewing the relevant files or bank records or even reading the documents before signing.
(Editing by Matthew Lewis)