JPMorgan fined $136M for debt collection practices
WASHINGTON - JPMorgan Chase (JPM) will pay $136 million to settle charges that it used illegal tactics to go after delinquent credit card borrowers, the Consumer Financial Protection Bureau announced Wednesday.
The CFPB alleged the bank illegally relied on robo-signing -- signing mass quantities of documents without verifying the data in those accounts -- and provided inaccurate information to third-party debt collectors when it sold the accounts. The bureau also said that Chase filed misleading lawsuits using inaccurate information to obtain debt collection judgments -- on accounts that were paid off, discharged in bankruptcy, or otherwise were uncollectable.
"Chase sold bad credit card debt and robo-signed documents in violation of law," said CFPB Director Richard Cordray in a statement.
Under the terms of the agreement, JPMorgan Chase & Co. will refund $50 million to affected consumers and pay $136 million in fines to the bureau, 47 states and District of Columbia. The bank will permanently halt collecting on 528,000 accounts.
It will have to pay a separate $30 million penalty to the Office of the Comptroller of Currency.
"Chase's consumer credit card debt collection practices were harmful to families when it pursued collections cases based on false and outdated information. In some cases the listed debt was the wrong amount, was associated with the wrong person, had previously been discharged, or was a time barred or very old 'zombie' debt," New York Attorney General Schneiderman said in a statement.
The agreement will also include changes to the way Chase will collect delinquent accounts. Any accounts that Chase sells to debt collection agencies will be unable to be resold to other agencies. Chase will also have to verify individually any account it sells to a debt collection agency confirming the debts are valid, and it will have to notify the delinquent customer that their debt was sold, among other changes.
JPMorgan had reached a similar, earlier agreement with federal regulators regarding its debt collection practices in 2013. The New York bank has refunded more than $50 million to consumers under that order.
"We are pleased to resolve these legacy issues," the bank said in a statement.