JP Morgan Chase to Pay Millions to Settle Credit Card Debt Probes
JP Morgan Chase will have to pay back $50 million to consumers and another $166 million to settle probes by both federal and state authorities for selling bad credit card debt and illegally robo-signing documents, the CFPB announced today.
The Consumer Financial Protection Bureau found that Chase robo-signed documents to sue consumers for unverified debt; assisted third-party debt buyers in deceptively collecting debt; and sold bad debt to third-party debt buyers. These accounts had been paid in full, identified as fraudulent, discharged in bankruptcy or already been subject to an agreed-upon payment plan.
There were an estimated 528,000 accounts involved between January 2009 and June 2014.
Chase was ordered to stop robo-signing, the practice of someone signing documents without properly reviewing them on an individual basis for accuracy. Future signings must be based on the direct knowledge of the person signing and their review of Chase’s business records.
Chase will pay $136 million in penalties and payments to the Consumer Financial Protection Bureau and 47 states plus the District of Columbia. In addition, they will pay at least $50 million in restitution to affected consumers, and another $30 million penalty to the Office of the Comptroller of the Currency.
“Chase sold bad credit card debt and robo-signed documents in violation of law,” said CFPB Director Richard Cordray. “Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices.”
“We are pleased to resolve these legacy issues and are working to complete our remediation of affected credit card customers,” JP Morgan Chase said in a statement.
The CFPB has a history of cracking down on credit card issuers and third-party providers for illegal practices. Last week, the Consumer Financial Protection Bureau fined two companies, Intersections, Inc. and Affinion Group Holdings, Inc, for selling credit card add-on products to consumers, but never providing the services to the buyers.
This is not the first time that Chase has been the subject of an action by the CFPB. In September 2013, the CFPB made JPMorgan Chase refund $309 million to credit card customers that were improperly billed for add-on products. The CFPB and the Office of the Comptroller of the Currency concluded that 2.1 million cardholders were billed for services between 2005 and 2012 that they never received. These add-on products included identity theft protection and fraud monitoring. Chase charged monthly fees ranging from $7.99 to $11.99. The investigation found that the company even charged customers for these services before the customers gave any authorization. In addition to the $309 million in refunds to cardholders, JPMorgan Chase were also ordered to pay fines of $60 million to the Office of the Comptroller of the Currency as well as $20 million to the CFPB’s Civil Penalty Fund.
About John H. Oldshue
John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.