JPMorgan Chase & Co. on Wednesday agreed to pay nearly $200 million to settle claims against the company that include illegal debt collection practices and trying to sell off bad debts to third party buyers, federal regulators said. Photo: UPI/John Angelillo | License Photo
NEW YORK, July 8 (UPI) -- JPMorgan Chase & Co. has agreed to pay out nearly $200 million for employing illegal tactics to try and collect and sell off debts, federal regulators said Wednesday.
The company agreed to settle various claims against Chase Bank USA and Chase Bankcard Services that involved 47 states and the District of Columbia, the Consumer Financial Protection Bureau said.
The claims accused JPMorgan Chase of trying to collect from wrong borrowers, involving inaccurate amounts and trying to sell off uncollectable "zombie debt" to third party buyers, the CFPB said.
"Chase is ordered to permanently stop all attempts to collect, enforce in court, or sell more than 528,000 consumers' accounts," the CFPB said in its statement Wednesday. "Chase will pay at least $50 million in consumer refunds, $136 million in penalties and payments to the CFPB and states, and a $30 million penalty to the Office of the Comptroller of the Currency in a related action."
JPMorgan Chase was also accused of illegally "robo-signing" court documents. Federal regulators say the company's actions violated the Dodd-Frank Wall Street Reform and Consumer Protection Act's prohibitions against unfair, deceptive, or abusive acts and practices.
"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," CFPB Director Richard Cordray said.
Regulators said the financial giant sold false debts to third-party collectors, including accounts with unlawfully obtained judgments, inaccurate balances, and paid-off balances -- as well as selling debts that were owed by borrowers who are now dead.
Wednesday's action marks the second time in two years that JPMorgan Chase has agreed to a settlement over abusive collection practices. In 2013, regulators ordered the bank to refund $300 million to customers following similar accusations.
Under Wednesday's agreement, the 47 states and D.C. will receive about $95 million, negotiators will get $11 million, the consumer bureau will get $30 million, and bank customers will share $50 million, Bloomberg reported.