(CN) - JP Morgan Chase abusively extracted tens of millions of dollars from debtors, and people who do not owe debts, through robo-signing, "intentionally inaccurate record-keeping," and all the abuses of the mortgage and foreclosure catastrophes, a class action claims in Federal Court.
Lead plaintiff Johanna Sierra sued JP Morgan Chase & Co.; its collections subsidiary the NCO Group; and the Austin-based debt-collection law firm Bickerstaff, Heath, Delgado & Acosta, in Manhattan Federal Court.
She claims the defendants "unlawfully obtained hundreds of millions, if not billions, of dollars from consumers," through fabricated evidence, lack of evidence, and outright fraud.
Just as in the mortgage and foreclosure crises, Sierra claims, Chase and its allies took advantage of an unregulated debt market to prey on consumers with procedural shortcuts and hound them for false or inaccurate debts.
"Defendants systematically and willfully violate the law in their efforts to mass-generate judgment accounts from consumer collection accounts, while knowing, or intentionally failing to know, that the consumers do not owe the underlying debt, in whole or in part," the complaint states. "Defendants intentionally do not obtain, or cannot obtain, proof that the consumers actually owe the alleged debt, in whole or in part.
"Defendants' unlawful scheme enables sophisticated corporate entities to improperly collect vast sums of money from consumers who are usually unaware that they do not owe the money defendants seek or who lack the resources to defend themselves from defendants' predatory behavior. As a result of this scheme, defendants unlawfully obtained hundreds of millions, if not billions, of dollars from consumers."
Sierra calls the scheme "corporate greed at its worst."
"Chase, one of the nation's largest credit card issuers with more than $137 billion
in loans and over 90 million open accounts, and NCO, the Chase subsidiary tasked with collecting on Chase's and other creditors' past due bills, have instituted a debt collection system designed, not to ensure that the so-called 'debts' on which it attempts to collect are in fact past due amounts owed by its customers, but instead to ensure that it can collect on as many debts as possible regardless of their validity," the complaint states. "Chase and NCO do this by maintaining a haphazard and intentionally inaccurate record-keeping system that results in the creation of bogus debts, either by failing to recognize payments or discharges, by falsely debiting multiple accounts for the same charges, by attributing past due balances to accounts the alleged debtor never actually opened, by fabricating accounts with balances that were never opened by the alleged debtor, by ignoring expired statute of limitations, and/or by other means.
"In fact, Chase conceded that huge numbers of the so-called debts upon which it tries to collect are bogus when it labeled billions of dollars in 'debt' as 'toxic' because the documentation of the 'debt' was so deficient that it could make no valid claim. Notwithstanding the fact that defendants know that Chase's records are an insufficient basis to conclude that a consumer owes them a valid debt, defendants systematically bring debt collection actions without undertaking even a rudimentary investigation to determine whether a 'debt' is in fact owed.