JPMorgan sued by Mississippi AG over credit card misconduct

Tue Dec 17, 2013 6:23pm EST
 
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By Jonathan Stempel

(Reuters) - JPMorgan Chase & Co (JPM.N: Quote) was sued on Tuesday by Mississippi Attorney General Jim Hood, who accused the largest U.S. bank of violating state consumer protection laws in its alleged pursuit of delinquent payments by credit card customers.

The lawsuit followed an 18-month probe, according to Hood, and adds to a long list of legal problems facing JPMorgan.

Last month, the New York-based bank reached a record $13 billion settlement over its sale of shoddy mortgage securities. It also faces probes over such matters as its hiring practices in China and its dealings with former client Bernard Madoff.

According to a complaint filed in a state court in Hinds County, Mississippi, JPMorgan has, since at least 2007, relied on "robo-signing" and other discredited practices to pursue consumers for sums they did not owe, already paid, or had excused in bankruptcy.

The lawsuit said employees described a "chaotic" and "disorganized" workplace marred by "rampant" mistakes, inadequate training, constantly changing policies, high turnover and unrealistic quotas.

Hood also accused JPMorgan of relying on "outhouse" law firms that would churn out lawsuits without first reviewing the underlying claims, and working with now-defunct arbitration firm Mann Bracken -- dubbed "Mann Broken" by bank employees -- that could not keep track of customer payments.

"Consumers' paychecks were garnished and their credit damaged, making it harder for them to refinance their homes, take out a car or student loans, or even get jobs," Hood said in a statement. "We have tried for months to resolve our concerns cooperatively, but have been forced into litigation."

The lawsuit seeks civil penalties of up to $10,000 per violation, which Hood said could result in a "significant" sum, and a ban on similar future misconduct.   Continued...

 
A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. REUTERS/Mike Segar