Agents of Chase Bank reportedly were jacking up the amount owed on some delinquent accounts before referring them out to third party collectors.
This practice is called “pencil whipping.” When an account would go delinquent, before it was turned over to a collection agency or outside lawyer to sue against the debt, Chase’s own in-house attorneys would change the amount owed.
So let’s say you went delinquent on a $2,000 credit card bill. They may have bumped that up to $5,000. Or higher. Suddenly, you have outside collectors seeking money above and beyond what you legitimately owe.
I am outraged by this. It’s scandalous and should be criminal. Chase has fired the in-house attorneys involved in this travesty.
But Payments Source, a companion publication to American Banker, reports that Chase is in so much legal jeopardy here that they have discontinued collection efforts in California, Florida, New York, Maryland and Washington. Meanwhile, collection activity has dropped precipitously in Illinois recently.
Chase’s response to the whole scandal? A predictable non-response, received by a reporter at The Baltimore Sun: “I cannot confirm any of the information in [the Payments Source article,] and because we operate in a highly competitive business, we consider our collections strategy to be proprietary, so I do not have any comment on the issue at this time.”
If you owe an outstanding debt to Chase, I want you to require in writing definite proof of the amount of money being sought and being referred out to third party collectors.