A key group of Senate Democrats has asked JPMorgan Chase & Co. for more information about its debt-collection policies and whether the biggest U.S. bank is engaging in practices that were deemed predatory following the 2008 financial crisis.
In a letter to Chief Executive Officer Jamie Dimon, lawmakers on the Senate Banking Committee including Sherrod Brown, the panel’s chairman, and Elizabeth Warren, asked the bank if it has resumed so-called robo-signing of legal documents when pursuing customers over credit-card debt. The practice, where employees process paperwork without thoroughly reviewing it, could affect “tens of millions” of American families, the senators said.
The claim that the bank is robo-signing documents “is just false,” said JPMorgan spokesman Tom Kelly in an emailed statement. Trained employees review every affidavit before they are filed in court and the firm complies with all ongoing requirements from regulators, he said.
In the wake of the 2008 financial meltdown, large U.S. banks’ use of automated signatures in foreclosure cases sparked a contentious legal battle and resulted in regulators instituting major sanctions against lenders. Legal documents had been signed by employees who never reviewed the cases, and in some situations the names were forged or had errors.
“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,” the Democrats said in a statement Monday, citing an article by ProPublica about JPMorgan mass-producing affidavits in lawsuits against credit-card customers during the pandemic.
The senators have asked JPMorgan for more information about its employees who handle lawsuits collecting on debt, and about consumer hardship policies the lender has in place. They also want to know whether the firm has violated previous orders from the Consumer Financial Protection Bureau. The lender agreed to end robo-signing in a settlement with the CFPB that expired in 2020.
–By Tom Schoenberg and Jesse Hamilton with assistance from Hannah Levitt (Bloomberg Mercury)
