JP Morgan Chase Ordered to Pay $50 million in Consumer Refunds

Federal regulators also hit the financial giant with $136 million in penalties for its illegal debt collection practices.

JP Morgan Chase Ordered to Pay $50 million in Consumer Refunds Photo (cc) by B Rosen

The tactics it used to go after delinquent credit card borrowers have landed JP Morgan Chase in hot water with federal regulators.

The Consumer Financial Protection Bureau said Chase’s tactics were illegal.

The agency, in partnership with attorneys general in 47 states and the District of Columbia, ordered Chase to permanently halt collection attempts on more than 528,000 consumer accounts. Chase must also pay $136 million in penalties and payments to the CFPB ($30 million) and states ($106 million) and $50 million in consumer refunds. Chase will pay a separate $30 million penalty to the Office of the Comptroller of the Currency in a related action.

“Chase sold bad credit card debt and robosigned documents in violation of law,” said CFPB director Richard Cordray in a statement. “Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices. We will continue to be vigilant in taking action against deceptive debt sales and collections practices that exploit consumers.”

Chase allegedly sold “zombie debts” to third-party debt buyers, which included consumer accounts that were inaccurate, already settled, not owed, discharged in bankruptcy or in some way not collectible.

According to the CFPB, in addition to halting collections on more than a half-million accounts, Chase must overhaul the way it sells debts.

The three states that didn’t participate in the settlement were California, Mississippi and Wyoming, The Associated Press reports.

California has litigation pending against JPMorgan, while Mississippi is continuing its own separate lawsuit against Chase, a spokeswoman said.

The Wyoming attorney general office could not be immediately reached for comment on why it did not participate in the settlement.

The CFPB said if you don’t recognize a debt from a debt collector, you have certain rights to verify it. You can send a letter to the debt collector to request more information. If you have a complaint about debt collection, you can submit a complaint to the CFPB online or by calling 855-411-2372.

What do you think of the CFPB’s crackdown on debt collection practices? Share your comments below or on our Facebook page.

Krystal Steinmetz
Krystal Steinmetz
A former television and radio reporter, I stay at home with my two young children, run a small craft business and freelance for Money Talks News. I have a BA in journalism ... More

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