FOR IMMEDIATE RELEASE: Monday, May 11, 2015
CONTACT: Claudia Wilner or Luis Daniel Caridad, 212-680-5100
New Economy Project filed a federal lawsuit against JPMorgan Chase and a Bronx-based car dealer last week, charging that the defendants defrauded Manhattan resident Olga Arroyo into buying a car and taking out an auto loan, in violation of multiple state and federal consumer protection laws.
As described in the lawsuit, in July 2014, Ms. Arroyo accompanied her son to auto dealer City World Ford to co-sign on her son’s purchase of a car, if needed. Ms. Arroyo, who relies on government benefits as her sole support and uses a walker and oxygen tank, informed the dealership that she could not own a car.
A week later, Ms. Arroyo was surprised to receive documents in the mail from Chase listing her as the sole borrower on a $51,000 auto loan, which she could not afford. She later learned that Chase had approved the loan through its automated underwriting system – despite the car dealer’s obvious falsification of her income and employment status.
“Chase is systematically approving loan applications from shady dealers, without any level of actual scrutiny, making huge profits in the process. These fraudulent underwriting practices are not unlike those that brought on the subprime mortgage crisis,” said Claudia Wilner, Senior Staff Attorney at New Economy Project.
The lawsuit alleges that in addition to financing an unaffordable loan, Chase knew or should have known of the car dealer’s extremely negative history: City World Ford was rated F by the Better Business Bureau and had been the subject of regulatory enforcement action. In addition, Chase refused to respond to Ms. Arroyo’s repeated complaints to the bank about the fraudulent, deceptive practices the auto dealer used to induce her into purchasing an overpriced car that she did not intend to buy, could not afford, and did not want.
The lawsuit seeks actual, statutory, and punitive damages, as well as an injunction against Chase to reform its underwriting procedures and stop financing fraudulent auto sales. New Economy Project filed the lawsuit with co-counsel Ahmad Keshavarz.