July 8, 2015 - 23:42 AMT
PanARMENIAN.Net - JPMorgan Chase 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, July 8, according to the Associated Press.
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 at least $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, the AP says.
The agreement, according to the AP, 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.
Federal regulators and state attorneys general said that while this settlement was against Chase, other banks and collection agencies used similar practices as well.
Illinois Attorney General Lisa Madigan said the agreement "could be used as a template to reform the debt collection industry."
The three states that were not part of the settlement were California, Mississippi and Wyoming. California has litigation pending against JPMorgan. The Mississippi and Wyoming attorneys general office could not be immediately reached for comment on why they did not participate in the settlement.