Consumer protection agency and 47 state attorneys general take on JP Morgan Chase over credit cards

NY Times - The Consumer Financial Protection Bureau and the attorneys general of 47 states and Washington, D.C. brought an enforcement action against JPMorgan Chase for abuse, deception and unfairness in credit card collection cases.

Some highlights from the action:

• On some 500,000 credit card accounts it sent to collections litigation in recent years, Chase used illegally sworn documents to obtain false or inaccurate judgments for unverified debts.

• The bank sold “zombie debts” to third-party debt collectors, including accounts that were inaccurate, settled, discharged in bankruptcy, not owed or otherwise not collectible.

• Chase helped those third-party collectors obtain court judgments against borrowers by providing more than 150,000 sworn statements attesting to the accuracy and validity of the debt. But according to the consumer bureau, “Chase systematically failed to prepare, review, and execute truthful statements as required by law.”

• Chase failed to notify customers and the courts when it became aware of these problems.

The enforcement action requires Chase to stop collecting on the debts it sent to litigation between January 1, 2009 and June 30, 2014 and to notify customers that it will not try to collect. It must contact the major credit bureaus to request that the judgments not be reported against those consumers. It also must refund at least $50 million to customers who have already paid up. The refunds are for amounts that the customers were told to pay above what they owed when the debt was referred to litigation, plus 25 percent of the excess.

The enforcement action also requires Chase to notify customers when their account is sold, including the identity of the purchaser, the amount owed, and how the customer can obtain further information at no charge. It must provide third-party collectors with detailed documentation on the accounts being sold, and is prohibited from selling accounts that do not have the required documentation. Any sworn documents about the debts must be signed by hand and reflect the signer’s direct knowledge.