Home > Managing Debt > Chase to Pay $166 Million for ‘Shoddy & Illegal’ Debt Collection Practices

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JPMorgan Chase will pay $166 million to settle charges that it engaged in illegal debt collection activities for years, and must adhere to strict new debt collection rules, state and federal authorities announced Wednesday. The bank will also refund at least $50 million to consumers and agree to permanently end collection activities on more than half a million accounts.

The Consumer Financial Protection Bureau and 47 state attorneys general joined in the enforcement action, which says Chase systematically broke collection rules from 2009-2013.

“Chase engaged in shoddy and illegal practices that disrupted the lives of 500,000 people,” said Illinois Attorney General Lisa Madigan.

The allegations include robosigning court documents when the bank was in the midst of jamming courtrooms with debt collection cases — 100,000 alone in California courts, according to a lawsuit filed in 2013 by California Attorney General Kamala Harris

“Chase filed more than 528,000 debt collections lawsuits against consumers and provided more than 150,000 sworn statements to debt buyers for their collections lawsuits against consumers, often using robosigned documents. In doing so, Chase systematically failed to prepare, review, and execute truthful statements as required by law,” the CFPB said.

Chase is also accused of collecting on so-called zombie debts — accounts that were either already settled or too old to collect on. (You can see what your state’s statute of limitations is on this map.)

“Chase sold faulty and false debts to third-party collectors, including accounts with unlawfully obtained judgments, inaccurate balances, and paid-off balances,” the CFPB alleges. “Chase also sold debts that were owed by deceased borrowers.”

Chase to Refund Overpayments Plus 25%

In a statement, Chase called the activities described in the enforcement action “legacy issues.”

“(The action) covers issues from several years ago for a small percentage of credit card credit card customers who defaulted on their credit card debt,” Chase said. “We are pleased to resolve these legacy issues and are working to complete our remediation of affected credit card customers.”

To settle the case, Chase will refund consumers who were sued between Jan. 1, 2009, and June 30, 2014, for amounts paid above what the consumer owed when the debt was referred for litigation, plus 25% of the excess amount paid.

The settlement also puts a series of new rules in place governing how Chase can attempt to collect debts in the future. While the rules will apply only to Chase, Madigan said they should serve as an example for all banks and debt collectors.

“They should be used as a template to reform the entire debt collection industry,” she said.

The rules include: Chase must prohibit its debt buyers from reselling accounts to other debt buyers; it must confirm debts before they are sold to debt buyers; and prior to selling debts, Chase must provide account-level documentation to debt buyers confirming that the debts are accurate and enforceable.

The settlement amount includes a $30 million civil penalty paid to the CFPB, a $30 million civil penalty paid to the Office of the Comptroller of the Currency on a related matter, and $106 million in payments to states.

“We will continue to be vigilant in taking action against deceptive debt sales and collections practices that exploit consumers,” said CFPB Director Richard Cordray.

If you’re worried you have a debt in collection or a “zombie debt” like some Chase customers experienced, you can get your free annual credit reports at AnnualCreditReport.com to check for negative information that could be affecting your credit score. You can also check your credit scores for free every month on Credit.com.

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  • John Steiner

    Isn’t it all a game? They will simply charge more for another product or products that consumers may use and the money goes out one side and right back in the other side.

    Until the executives and directors pay the fines from their pockets the consumer continues to be played for a fool.

  • Dana R.

    Capital One has been doing this to me for years. I paid off my account during a refi. The next thing I know they have sold my account to a collection agency (they obtained a judgment against me) who tried to collect on this debt. They then sold it to another collections agency (Portfolio) who accepted my cancelled payoff check to Capitol One, took their by line off my credit report. Capitol One or w u over sold it again to another collection attorney who tried to file for a renewal of judgement. Long story short, I had to get an attorney who stopped the renewal, u owner the judgement still comes up on our local court records check. It has been 8 years of pure hell caused by Capital One refusing to show anyone where the money I paid them went, and continuing to say the debt was still valid but could not show where the money that was paid to them went. I know I am not the only victim of Capital One. When will they be held accountable?

    • http://www.Credit.com/ Gerri Detweiler

      Have you filed a complaint with the Consumer Financial Protection Bureau?

      • Dana R.

        Yes. Twice. Cannot get even a phone call back. When I call them I am told that someone will get back to me. This will be 3 years since I filed my original complaint with them.

        • http://www.Credit.com/ Gerri Detweiler

          I am at a loss – if you have hired and attorney and filed a complaint with the CFPB I am not sure what other options there are…Have you talked with an attorney who handles credit damage cases?

    • angelica

      No I am a victim of Capital One as well. Not sure where to start with this, but I just went through and credit counsel instead. Will see what they can do about it.

  • Jack

    This settlement is absolutely pathetic! As I read it, consumers will only get back any additional money they may have already paid above what they owed, plus 25%. Consumers who had their lives made miserable by these illegal practices and maybe did not get approved for loans, jobs or rentals, but who did not pay “extra”, get NOTHING.

    The Federal agencies and states get some money, but these amounts are certainly not a substantial penalty for a major bank.

    And the “new rules” for Chase only document and reinforce what any responsible bank should have always done.

    If a normal company would sell an asset to another company that was really not owned or a legitimate asset, the officers or owners would be prosecuted for fraud. That is what the officers and executive VPs of Chase should have been prosecuted for. .

  • nickib

    I wonder if any of their lousy loan modification procedure delay tactics & feed will be included?

  • Julie Pawlowicz

    I was sued by them during this time, but have never received any information about this court case. Unfortunately, I didn’t overpay anything, but had to endure them wrongfully closing my account which lingers on my credit report, lost all the airline miles I had built up on my card, they refused to reopen my account, and I had to pay several hundred dollars in court fees to file paperwork to prove what was already in their system… that I had been making all my payments (more than the minimum each month), they acknowledged they could see in the system I was right, but it was “out of their hands” once it went into litigation… I take time to tell anyone that even MENTIONS Chase bank this horrible story. Glad I am following Dave Ramsey’s advice & cash flowing the rest of my life so I NEVER have to deal with these crooks ever again!

    • Amy @ Thoughts of THAT Mom

      Except Dave Ramsey doesn’t advise to never use credit. He simply advises to use it wisely.

      NOT using it at all will hurt you worse in the long run unless you can or have paid cash for all vehicles and houses.

      Take it from a former “cash only, never a credit card” family.

      We’re still debt-free, but we now use credit cards wisely…to our advantage. We pay in full as soon as the balance posts.

  • Sue

    I wonder if mortgages are included ? I am in such trouble due to jp Morgan Chase and my Mortgage :(

    • frangelica1

      I went through 6 years of hell with Chase because of their horrible mortgage accounting practices, illegal collection calls, lack of a single point of contact in customer service and they ruined my credit during all those years, even though I was never late with a mortgage payment. They have cost me ~ a million dollars in losses due to the undeserved bad credit and they still do not have their accounting correct on my mortgage.

      I need a lawyer to go after them for their criminal activities.

  • Gildardo Villarruel

    Well i was sent to collection in 2012 ..who do I contact because its effecting my credit very badly?

    • http://www.Credit.com/ Gerri Detweiler

      Have you filed a complaint with the Consumer Financial Protection Bureau?

      • Gildardo Villarruel

        Very nice of you…now I will

        • http://www.Credit.com/ Gerri Detweiler

          Let us know how that works out.

  • kitty witty

    Great glad something has done something. i had a disney chase visa and PAID every penny even durning time of hardship and they still ruined my credit and were total jerks. gave me ill feelings about mickey mouse and i was total disney fan. 8 years with only 2 missed payments and they would not report what we agreed which was closed by consumer. hate them

  • http://www.Credit.com/ Gerri Detweiler

    If you were covered by the settlement then you may be owed a refund. There are more details on the CFPB website here: http://www.consumerfinance.gov/newsroom/cfpb-47-states-and-d-c-take-action-against-jpmorgan-chase-for-selling-bad-credit-card-debt-and-robo-signing-court-documents/

  • Shari L

    I think that my JP Morgan Chase loan was sold to National Collegiate Student loan trust and that I was making payments to JP Morgan Chase without knowing that the loan was “transferred” to NCSLT and now the loan servicer American Education Services has record that I was paying both loans …there are TWO different “original loan amounts” with different SEQ numbers…now I am being sued by the National Collegiate Student Loan Trust for the COMBINED amounts….I do not understand it and I think there is a federal loan collection legal issue….I have records. I have bank statements and statements from the American Education Services (AES). Something is being documented either illegally or incorrectly. Is there anyone out there who I can contact to bring an investigation about the two loans? I am pretty sure there is an illegal loan transfer or collection dispute that I can claim but not sure how to go about it. According to the AES these are TWO separate loans but the lawsuit says they are collecting for JP Morgan Chase Bank.

    • http://blog.credit.com/ Kali Geldis

      Hi Shari —

      You could try filing a complaint with the CFPB and may want to consider hiring a consumer law attorney to get to the bottom of how this happened.

      • Shari L

        Kali…what is most concerning to me is that there two (NCSLT and JP Morgan Chase) bank were both collecting on the same loan simultaneously…NCT was listed by both American Education Services as a owner and collector…however the Chase loan was showing it’s Owner until August of this year and I was paying a Deferral for NCT for loan that APPEARED to be separate in Disclosure documents and balance owed as well as interest rate. I’m so baffled! I’m going to see an attorney Tuesday to see if I the Federal Collections Act has been violated…the lawyers representing NCSLT appear to be trying to settle out of court…but my bigger concern is that the JP Morgan Loan and/or NCT lender will attempt to collect more later of the question of what loan are the actually suing for. ..I have already paid over $18,000 back on a $28,000 loan…now they say I own a total of $54,981!

        • http://blog.credit.com/ Kali Geldis

          Definitely best to consult an attorney here — unfortunately, with so much debt flying around, there are mistakes made and a small mistake to a lender or debt collector can be a life-changing one for you. Also, debt collectors can continue to charge interest on debts, which may be part of that much larger total you’re looking at.

  • Bruno

    I’m lost ,I was sued by a credit card company back in 2009 i don’t remember the company I think they sold the debt to [redacted]: they started garnishing my money weekly $80.00,we went to court me and my lawyer bus she was late so I talked to their lawyer and accept to pay monthly before going to the judge:they say I owe more than $5,000.00 thousands dollar I started paying them $100.00 dollars monthly since 2011; it’s been more than four years; i already called [redacted] ask them how much more I have to pay and they don’t know anything; I don’t know what to do: should I hire a lawyer !? Will they stop take my payments if i paid off my debt!? Please help if possible; thanks

    • Jeanine Skowronski

      Hi, Bruno,

      You may want to consult a consumer attorney to learn what your best recourse is.

      Thank you,

      Jeanine

  • Ace

    I have 3 accounts [redacted] that were sold to collection agency. I called them many times to delete those accounts or mark them as sold and close it. But they keep on telling me that I have to deal with the collection agency instead. So, I settled all debt with the collection company but [redacted] were still reporting it as debts owed to them. Later, My Clearance were denied and I was placed on admin works due to unpaid debt to [redacted]. I was prohibited to do my normal Job. This really affected me in so many ways. I am planning on suing them. How should I handle this? They finally deleted the account after I called them and told them of what happened and told them that I may sue them. However the damage is already done.

    • Jeanine Skowronski

      Hi, Ace,

      You may want to consult a consumer attorney about what your best recourse may be.

      Thank you,

      Jeanine

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