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JPMorgan Sues Law Firm For Putting Data of Bank’s Clients at Risk

January 11, 2017

Law360 reported that JPMorgan Chase Bank NA sued law firm Korte & Wortman PA in Florida federal court on December 21st, accusing the firm of making invalid requests for customers' personal information and putting that information at risk in violation of the Gramm Leach Bliley Act.

The suit accuses the West Palm Beach firm of launching an "unethical" and "aggressive" campaign to file hundreds of "frivolous" lawsuits against mortgage loan providers like JPMorgan. The suits accuse the banks of violating the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) by not responding to clients' personal information requests, when in fact those requests were made by the law firm and were not authorized by the clients in violation of consumer protection laws.

The complaint said, "This case presents the epitome of attorney abuse of a consumer protection statute."

JPMorgan is asking the court to issue a declaration that it doesn't have to respond to the firm's requests for customer information under either act and seeks an injunction that would bar the firm from making similar requests in the future.

The law firm, which describes itself as a "foreclosure-defense" firm, allegedly has repeatedly submitted forms, purportedly signed by JPMorgan mortgage loan borrowers, which ask JPMorgan to release borrowers' information and records to the firm. JPMorgan claims the forms aren't signed by the individual customers, but says they're all signed by the same member of the firm, making them invalid.

JPMorgan asserts that if the bank were to respond to the unauthorized requests, the bank could be violating the Gramm Leach Bliley Act, which requires banks to safeguard customer personal information, the suit said.

JPMorgan is worried that if it doesn't respond to the requests by the statutory deadlines, Korte & Wortman will file lawsuits alleging it violated RESPA and TILA, as the firm has done "hundreds of times" throughout Florida, JPMorgan said, adding that it has spent "significant amounts" defending itself against such lawsuits.

RESPA doesn't provide an award of prevailing party attorneys' fees if mortgage loan providers like JPMorgan successfully defend those suits. As a result, the firm forces the bank into a "catch-22", either ignoring the requests and risk getting sued, or responding to them and potentially violating Gramm Leach.

At least one federal judge in Florida has sanctioned Korte & Wortman for filing such a lawsuit, saying that the firm has created a cottage industry of filing frivolous RESPA-based lawsuits, while failing to inform their clients of the nature of the suits or of the requests for personal information that are being submitted, according to the complaint.

Though I am rarely a fan of big banks, if what JPMorgan alleges is true, I'm glad it brought the suit. And it certainly sounds like there's an ethical issue here.

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