NY to get $11 million from JPMorgan debt-collection deal

It found that in some cases Chase filed lawsuits and obtained judgments against consumers using documents that were “robo-signed” (signed without personal knowledge of the signer) or based on inaccurate information. Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices.

Of that $125 million, about $50 million has been earmarked for restitution, according to sources familiar with the matter.

A copy of the Ohio settlement is available on the Ohio Attorney General’s website.

Michigan Attorney General Bill Schuette announced Wednesday that the state is part of a $136 million joint state-federal settlement with other states and the Consumer Financial Protection Bureau.

Chase will also be required to conduct due diligence on third-party debt buyers and, in the future, only sell consumer debts to licensed debt buyers. While the rules will apply only to Chase, Madigan said they should serve as an example for all banks and debt collectors.

The resale prohibition is significant. Before the settlement, buyers of Chase’s consumer credit card debt could resell the debt, then those buyers could sell it to other buyers, with the process repeat itself many times.

The settlement was the result of a collaborative effort between the Pennsylvania Office of Attorney General, attorneys general in 46 other states, plus the District of Columbia, and the Consumer Financial Protection Bureau.

Using incorrect account collections practices.

Debt buying involves the original company selling debts to collection companies for pennies on the dollar.

“Chase sold bad credit card debt and robo-signed documents in violation of law”, said CFPB Director Richard Cordray in a statement. These practices misled consumers and courts and caused consumers to pay false or incorrect debts and incur legal expenses and court fees to defend against invalid or excessive claims.

Made calculation errors when filing debt collection lawsuits that sometimes resulted in judgments against consumers for incorrect amounts.

Mississippi and California apparently like their chances of gaining a much larger settlement or judgment through separate suits filed against JPMorgan Chase that claim a range of illegal consumer debt practices by the financial services giant.

Chase will also seek to withdraw, dismiss or terminate all prejudgment collections litigation on matters pending at any time between January 1, 2009, and June 30, 2014. Notification of the affected borrowers will take place by Chase, who will also request that the credit reporting agencies don’t report the judgments.

Jepsen said the settlement, among other things, requires Chase to overhaul its collection practices and will “institute real and meaningful reform”. The settlement requires $50 million in consumer restitution and prohibits active collection on approximately 500,000 consumer accounts, including about 5,000 Connecticut consumer accounts.