Research and Statistics

Infographic: How Robo-signing works in credit card debt


When creditors mechanically and automatically certify that credit card debt is real without any documentary evidence, it’s called robo-signing, and the practice is both widespread and controversial

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The state of California has filed suit against JPMorgan Chase, alleging the bank used illegal shortcuts when it came to thousands of debt collection lawsuits. According to the lawsuit, filed May 9, 2013, the bank circumvented California law in the name of saving time and money to collect debt held by tens of thousands of credit borrowers.

Among those alleged shortcuts was a tactic called “robo-signing,” a practice once rampant in mortgage foreclosures before it was outlawed. Debt lawsuits require signed affidavits from the entity that holds the debt before it can get default judgments and garnish wages, swearing that it has reviewed proper documents and is sure the claim is accurate. However, these reviews are time-consuming — and, JPMorgan Chase, the lawsuit alleges, had employees sign off on thousands of cases without doing the required research.

That glut of cases, according to the suit, “flooded California’s courts with collection lawsuits” against credit borrowers and took advantage of the fact that borrowers “would lack the resources or legal sophistication to call [the bank’s] bluff.”

This case isn’t the first time robo-signing debt lawsuits has been criticized. Courts, regulators and consumer advocates have become increasingly skeptical of robo-signed credit card debt paperwork.

To learn more about how robo-signing works — and how it can harm borrowers — use the interactive graphic below.



See related: Robo-signed collection cases under fire, More infographics

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