By Jonathan Stempel
(Reuters) - JPMorgan Chase & Co
The lawsuit followed an 18-month probe, according to Hood, and adds to a long list of legal problems facing JPMorgan.
Last month, the New York-based bank reached a record $13 billion settlement over its sale of shoddy mortgage securities. It also faces probes over such matters as its hiring practices in China and its dealings with former client Bernard Madoff.
According to a complaint filed in a state court in Hinds County, Mississippi, JPMorgan has, since at least 2007, relied on "robo-signing" and other discredited practices to pursue consumers for sums they did not owe, already paid, or had excused in bankruptcy.
The lawsuit said employees described a "chaotic" and "disorganized" workplace marred by "rampant" mistakes, inadequate training, constantly changing policies, high turnover and unrealistic quotas.
Hood also accused JPMorgan of relying on "outhouse" law firms that would churn out lawsuits without first reviewing the underlying claims, and working with now-defunct arbitration firm Mann Bracken -- dubbed "Mann Broken" by bank employees -- that could not keep track of customer payments.
"Consumers' paychecks were garnished and their credit damaged, making it harder for them to refinance their homes, take out a car or student loans, or even get jobs," Hood said in a statement. "We have tried for months to resolve our concerns cooperatively, but have been forced into litigation."
The lawsuit seeks civil penalties of up to $10,000 per violation, which Hood said could result in a "significant" sum, and a ban on similar future misconduct.
JPMorgan spokesman Paul Hartwick declined to comment.
On September 19, the U.S. Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency ordered JPMorgan to refund $309 million to about 2 million customers they said were harmed by its debt collection and other credit card procedures.
At the time, JPMorgan said collection issues affected fewer than 1 percent of its customers, and that it stopped filing collection lawsuits in 2011 and stopped enrolling customers in credit monitoring services in 2012.
In May, California Attorney General Kamala Harris also filed a lawsuit accusing JPMorgan of "robo-signing" in credit cards and flooding state courts with questionable lawsuits.
The case is Mississippi ex rel. Hood v. JPMorgan Chase & Co et al, Chancery Court of the First Judicial District of Hinds County, Mississippi, No. G2013-1939.
(Additional reporting by David Henry; Editing by Bob Burgdorfer)