Question:
 Why is the U.S. government looking into Chase’s credit card collections efforts?

Answer:                                                                                                              According to a pair of recent articles in American Banker, http://www.americanbanker.com/issues/177_49/chase-credit-cards-collections-occ-probe-linda-almonte-1047437-1.html and http://www.americanbanker.com/issues/177_52/jpmorgan-chase-credit-card-collections-1047573-1.html, the Office of the Comptroller of the Currency is probing allegations by former and current employees of JPMorgan Chase, the bank “took procedural shortcuts and used faulty records in suing tens of thousands of delinquent credit card borrowers for at least two years.” The concerns were originally raised by former mid-level executive Linda Almonte.

Question:                                                                                                               Who is the Office of the Comptroller of the Currency and why do they care about credit cards?

Answer:
  The Office of the Comptroller of the Currency is an independent bureau of the US Department of the Treasury who regulates and supervises all banks and federal savings associations. This includes regulating banks which issue credit cards to consumers.

Question:
Why is the Office of the Comptroller of the Currency reportedly probing problems with JPMorgan Chase’s credit card collections?

Answer:
According to American Banker, current and former Chase employees say the bank “took procedural shortcuts and used faulty records in suing tens of thousands of delinquent credit card borrowers for at least two years.” The widespread problems and concerns raised by former executive Linda Almonte prompted the OCC to probe the bank and forced Chase to stop filing new lawsuits.

Question:
What actions have the OCC taken?

Answer:
According to American Banker, OCC investigators performed a two month review of Chase’s San Antonio operation, leaving with “a large quantity of Chase records in tow.” However, the exact scope of the review is unclear.

Question:
Who is Linda Almonte and why is she drawing this attention?

Answer:
Almonte is a former mid-level business process executive in Chase’s San Antonio-based Credit Card Litigation Support Group, according to American Banker. Her job was terminated in 2009, and she contended in a wrongful termination suit she lost her job after objecting about Chase selling credit card debt with erroneous balances. The lawsuit was settled in April 2011 on undisclosed terms. In addition to filing the lawsuit, Almonte also contacted the Securities and Exchange Commission and Federal Trade Commission and spoke to the Office of the Comptroller of the Currency about the allegations made against Chase, according to American Banker.

Question:
What concerns did Almonte raise about Chase’s collections efforts?

Answer:
American Banker states Almonte’s accusations against the bank include inconsistent past due balances generated by the bank’s computer systems; pressure to increase collections even without supporting documentation; and robosigning of affidavits.

Question:
Was there an incident which prompted the problems between Almonte and Chase?

Answer:
Almonte contends her relations with the bank soured after she started questioning a sale of $200 million in legal judgments to an outside debt collection company, American Banker states. NEARLY HALF the files her team sampled lacked proofs of judgment or other information and nearly a quarter misstated the amount owed, according to the American Banker article. The accounts being sold included some originating with Washington Mutual which reportedly were labeled with a code the credit card litigation group used signifying “toxic waste.”

Question:
What are affidavits and why are they important?

Answer:
An affidavit is a sworn, written statement of fact before a person authorized to take an oath, such as a notary public. By law, collection affidavits require the affidavit signer to be familiar with the bank’s records, according to American Banker. These affidavits are typically used as evidence to support collections lawsuits.

Question:
What were the reported problems with the affidavits used by Chase?

Answer:
American Banker reports that “numerous” former employees of Chase say the people signing the bank’s affidavits routinely signed stacks of affidavits and “rarely if ever” reviewed the documents for inaccuracies. “Hardly, if ever, was anything verified,” Almonte’s SEC Complaint states. “There was constant complaining by the Attorney Liaisons about having to manually sign these affidavits. They always questioned why they could not have them digitally signed in bulk.”

Question:
How did Chase respond to the allegations made by Almonte in her lawsuit?

Answer:
American Banker states that Chase didn’t even try to argue against Almonte’s contentions regarding the inaccuracy of its records. The bank argued it was within its rights to fire Almonte because she was an at will employee and claimed it was allowed to sell accounts with lacking or problem documentation so long as it told the companies buying the debt.
“The parties explicitly agreed that the judgments were purchased ‘as is’ and ‘with all faults,’” Chase’s attorneys wrote in a brief in defense of Almonte’s lawsuit.

American Banker’s articles reveal some of the types of difficulties consumers can run into as a result of shortcuts, missing records, and other instances of problem business practices by banks like Chase. Click here for a related article giving a hypothetical story on how improper debt collection can ruin one’s life.