Chase settles debt collection lawsuit

The nation’s largest bank will pay $ 50 million to settle claims it used illegal and abusive debt collection practices to extract money from California credit card customers.

The deal settles a 2013 lawsuit brought against JPMorgan Chase by California Atty. Gen. Kamala Harris and follows a national settlement on similar allegations.

Harris said that from 2009 to 2013, Chase miscalculated the amounts consumers owed, sold debts to collectors even though they were settled, and filed more than 125,000 lawsuits against Californians using documents. “Robo-signed” – those that have not been reviewed before being submitted. to the court.

The bank was also accused of sending threat letters to consumers and improperly seeking default judgments against active-duty military personnel, in violation of federal and state laws.

The settlement, which was announced Monday but has yet to be approved by the court, asks Chase to pay the state $ 50 million in penalties.

“Abusive and illegal debt collection practices will not be tolerated in California,” Harris said in a statement. “This settlement brings real relief to tens of thousands of Californians, including the military, and prevents JPMorgan Chase from continuing these deceptive and illegal debt collection practices.”

In addition to state-imposed penalties, Chase will pay $ 50 million in restitution to customers who have fallen victim to its debt collection practices, which the bank has agreed to do as part of a larger-than-life settlement. ‘it concluded this summer with 47 states and federal consumer financial protection. Office. About $ 10 million is expected to go to customers in California.

Chase has also accepted, in both state and California regulations, a list of conditions governing how he can collect debt or sell consumer debt to outside collection companies.

For example, the bank has agreed to make sure its contracts with debt buyers – the companies that buy consumers’ delinquent credit card debt and then try to collect that debt – prevent them from going after consumers. consumers unless they have all the information they need to prove their debts. to exist.

Ira Rheingold, Executive Director of Assn. of Consumer Advocates, said banks often provide debt buyers with incomplete or inaccurate information, but are often still able to collect it because consumers do not know their rights or are unable to understand themselves. beat in court.

The settlement announced on Monday, and the national settlement reached over the summer, should be a sign to banks that the type of breaches alleged in the California case are likely to be the subject of further scrutiny by the from regulators, Rheingold said.

“I think what you see with these decisions is that the banks had better get their act together. The rules are coming and this kind of behavior will not be tolerated, ”he said. “The status quo in terms of debt collection must end. “

Chase spokesman Paul Hartwick said the bank had worked to resolve debt collection issues over the past few years. Since 2011, he said, the bank has not taken any credit card debt lawsuits against customers and has dismissed inappropriately filed lawsuits.

“We’ve been working on this over the past few years and have made a lot of progress,” Hartwick said.

In the California and National Colonies, Chase has neither admitted nor denied the wrongdoing, and the bank said the cases targeted practices the bank stopped years ago.

Yet the debt collection settlements add to an expensive payment for the bank. Between customer returns and penalties paid to California, other states, the Consumer Financial Protection Bureau and the Federal Office of the Comptroller of the Currency, Chase has lost more than $ 250 million to date.

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