National regulatory scrutiny may turn to how card issuerscollect on delinquent and charged-off credit card debt thanks inpart to a new California lawsuit against JP Morgan Chasealleging illegal collection activity.

In the May 9 suit, California Attorney General Kamela Harris alleged that the bank had been using shoddy andeven fraudulent legal practices in widespread attempts to collecton credit card debt for which the bank actually had insufficientrecords or lacked records entirely.

“For years, defendants have flooded California's courts withcollection lawsuits against defaulted credit card borrowers basedon patently insufficient evidence–betting that

borrowers would lack the resources or legal sophistication tocall defendants' bluff,” Harris alleged in the complaint. “Ratherthan follow basic procedures to ensure fundamental fairness toCalifornia consumers, defendants have run a massive debt collectionmill that abuses the California judicial process to obtain defaultjudgments, writs of execution and wage garnishment orders on thebacks of lawsuits that cannot

withstand scrutiny. At nearly every stage of the collectionprocess, defendants have cut corners in the name of speed, costsavings, and their own convenience, providing only the thinnestveneer of legitimacy to their lawsuits.”

Abuses detailed in the complaint included telling consumers thattheir files had been reviewed by attorneys when, in fact,they had not been; claiming inaccurate amounts of debt; andthreatening to collect attorney's fees and file liens on realproperty.

Other allegations hearken back to the robo-signing scandal in mortgage lending and foreclosures.“Defendants file a verification of the complaint in which thedeclarant states, under penalty of perjury, that the declarant isan assistant treasurer and officer of Chase USA, and that thematters alleged in the complaint are true. These statements arefalse. The declarant is neither an 'assistant treasurer' nor an'officer' of Chase USA, but rather a low-level employee of BankCardServices who has never even seen the complaint,” the attorneygeneral wrote.

The complaint charges that the bank has filed more than 100,000such debt collection lawsuits against cardholders between January2008 and April 2011, including over 460 on one day alone, followedby another with 226 filed.

JP Morgan has not commented on the suit, other than to say it iscooperating with California.