When a customer doesn’t pay her debts to a bank or credit card company, the company will often sell the customer’s debts to a collection agency. There’s nothing inherently wrong with this practice, so long as the debts are real. As Matt Taibbi colorfully put it: “The Cliff’s Notes version of the story goes something like this: Late in 2009, Chase’s credit card services division sold a parcel of nearly $200 million worth of credit card judgments to a debt collector at a discount. This common practice in the credit-card industry is a little like a bookie selling the outstanding debts of his delinquent gamblers to a leg-breaker for 25 cents on the dollar. If the leg-breaker gets half the delinquents to pay, the deal works out for both sides — the bookie gets 25 percent of money he wasn’t going to collect, and the leg-breaker makes a 100 percent profit.” Here’s the problem: it appears that Chase sold debts that weren’t real.
Linda Almonte, a courageous former employee of JP Morgan Chase, recently revealed that many of the debts that JP Morgan sold to collection agencies simply didn’t exist or were wrongly inflated. In other words, Chase would sell a non-existent customer “debt” to a collection agency, and the agency would then try to collect a debt. To complete Taibbi’s analogy, people who didn’t owe the bookie any money suddenly received threats from the leg-breaker. Put concretely, people who paid their credit card bills on-time would suddenly receive phone calls, threatening letters, and, possibly, lawsuits from collection agencies who claimed they were trying to collect unpaid credit card bills from Chase. Some of these people may have simply paid the bill, without realizing that the entire premise of the bill was false.
Others must have wasted hours fighting harassment that never would have happened if Chase had done the wrong-thing. Not surprisingly, the government is investigating Chase’s debt sales. If you were a JP Morgan Chase customer, and you were contacted by a collections agency about a non-existent or inflated credit card debt, your legal rights have been violated. Please contact us immediately to discuss your legal options.