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Banks Guilty of "Robo-Signing" in Pursuing Credit Card Debt?

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The New York Times recently cited a practice called “robo-signing” which may be causing credit card companies a lot of headaches. Robo-signing refers to the practice by which the credit card companies present evidence against a debtor in court where the information often presented may not even be correct. One former employee of JPMorgan Chase called attention to the problem in almost 23,000 delinquent accounts to which were attributed incorrect balances (The employee, Linda Altamonte, a former assistant VP at JPMorgan Chase was fired…).[1][1]

Herein lies the rub, lawsuits against credit card borrowers who have not repaid their debts are now “flooding the courts” with the credit card companies (banks, in other words) pursuing their debtors armed with perhaps less-than-accurate information. Tom Pahl, assistant director for the Federal Trade Commission’s division of financial practices, says the documents presented in court generally are often “very bare bones.”[2][2] Some lenders, like American Express, say not so. “We…verify the accuracy of information before affidavits are filed and testimony is given,”[3][3] says Sonya Conway, American Express spokesperson.

But judges are complaining and even challenging the paperwork over documents that have the “look and feel of a robo-signed affidavit, prepared in advance”[4][4] with sometimes specious signatures. The banks have recently faced increased scrutiny over mortgage lending practices and the use of faulty documents in foreclosures. Five of the bigger banks agreed in February to fork over $26 million to resolve the issue.[5][5] It pays to have individuals dispute erroneous credit card claims, however, because frequently the errors are on the part of the credit card companies and individuals stand, if not to gain, not to lose more by showing up in court and presenting their cases.

Unfortunately, given the recent financial calamities suffered world-wide, brought on in large part because of greed in the mortgage-backed securities industry (again, investment banks, etc.), trusting one's bank or credit card company to get it right involves a large dose of faith not typically earned.


[1][1] “Problems Riddle Moves to Collect Credit Card Debt,” Silver-Greenberg, Jessica, 08/12/12, The New York Times, New York, NY. http://dealbook.nytimes.com/2012/08/12/problems-riddle-moves-to-collect-credit-card-debt/?ref=jessicasilvergreenberg

[2][2] Op. Cit.

[3][3] Ibid.

[4][4] Ibid.

[5][5] Ibid.