The Consumer Financial Protection Bureau has charged JPMorgan Chase with yet another criminal misdeed, this time for its illegal debt collection practices. These include using illegal collections tactics that were targeted at credit card borrowers that were overdue. The CFB will charge JPMorgan Chase with over $136 million in penalties for its crimes.
The CFPB commented, “[JPMorgan Chase] sold ‘zombie debts’ to third-party debt buyers, which include accounts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectible”.
Richard Cordray, Director of the CFPB, outlined the crimes and the penalties to follow. In short, JPMorgan Chase broke the law by selling defective credit card debt and by robo-signing documents. The bank giant is being ordered to change their debt-sale practices and to permanently stop collections on over 528,000 accounts. The CFPB also promised to be more vigilant in the future in taking measures against illegal debt sales practices that hurt consumers.
JPMorgan Chase is being forced to pay up to $30 million to the Office of the Comptroller of the Currency in penalties and $50 million to refund consumers. This comes after the CFPB forced Chase to shut down their illegal attempts at dealing with over 528,000 accounts.
The agreement between JPMorgan and the CFPB also states that purchasers of such debt can only sell it back to Chase. The debt cannot be sold elsewhere. Also, before Chase can sell debts, they must be able to verify their validity. Finally, Chase must notify consumers when their debt is sold. These measures are hoped to put a stop to the illegal debt practices that were being used by Chase.
According to the Associated Press, 47 of the 50 states, along with the District of Columbia joined the Consumer Financial Protection Bureau in the action against JPMorgan Chase. California, Mississippi and Wyoming were the only states that did not participate in the lawsuit. Ironically, California and Mississippi are currently in the middle of their own lawsuits against Chase. Wyoming is the only state without comment on the matter.