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JPMorgan Chase to pay $166 mln in settlements over credit-card debt probes

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The settlement is JPMorgan’s second in two years over its debt-collection practices.

JPMorgan Chase (NYSE:JPM) will pay $166 million and change credit-card collection practices after regulators found that the bank used abusive tactics to collect debts, the Consumer Financial Protection Bureau said today.

The company agreed to resolve claims that its Chase Bank USA and Chase Bankcard Services Inc. units pursued the wrong borrowers, sought incorrect amounts or so-called zombie debt that was too old, or relied on documents with improper signatures, according to a CFPB statement.

The largest U.S. bank has been accused of relying on robo-signing and other discredited methods of going after consumers for debts they may not have owed and for providing inaccurate information to debt buyers. 

Robo-signing refers to signing documents in mass quantities without reviewing records.

Of the penalties, $136 million settles claims brought by the Consumer Bureau, 47 states and the District of Columbia. 

The Office of the Comptroller of the Currency imposed a $30 million penalty in a related action, CFPB said.

The settlement is JPMorgan’s second in two years over its debt-collection practices. In September 2013, J.P. Morgan was ordered to refund $309 million to 2.1 million credit-card customers and pay $80 million in fines, at the time the largest penalty—$389 million—in a broad examination of products sold to credit-card customers. 

The bank didn’t admit or deny allegations that it harmed consumers by allegedly making errors in hundreds of thousands of debt-collection lawsuits.

J.P. Morgan addressed many of the same issues raised by the CFPB and states in a consent order with the Office of the Comptroller of the Currency, also in September 2013.

In 2011, CFPB penalized American Express Co. for falsely telling consumers that paying old debt would improve their credit scores. The company paid $112.5 million in fines and restitution. The agency has also taken action against Bank of America Corp. and Synchrony Bank over credit-card marketing.

About 77 million American consumers have debts ranging from $25 to $125,000 that are subject to collection, according to the CFPB. Most don’t know of the issues until they receive calls from debt collectors or review their credit reports, the agency said in a report this year.

 

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