JPM to reform credit card collection in settlement with U.S., states

Wed Jul 8, 2015 3:29pm EDT
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By Karen Freifeld

(Reuters) - JPMorgan Chase & Co (JPM.N: Quote) will pay $136 million and reform its credit card debt collection practices as part of a joint state-federal settlement of a probe that found it had acted illegally, U.S. authorities said on Wednesday.

The bank will also pay at least $50 million in consumer refunds and $30 million to the Office of the Comptroller of the Currency in a related action, authorities said.

"This is a good, strong settlement that's going to help a lot of people," Iowa Attorney General Tom Miller, who helped lead the probe, said on a conference call with reporters.

An investigation by the Consumer Financial Protection Bureau and state attorneys general showed the nation's largest bank had subjected consumers to collections for accounts that were not theirs, contained erroneous amounts, or were uncollectible, the authorities said.

Chase relied on robo-signing and other discredited methods to pursue consumers and gave inaccurate information to debt buyers, the authorities said. Robo-signing refers to the signing of mass quantities of documents without reviewing records.

As part of the settlement, Chase agreed to reform the bank's credit card collection practices and debt sales. The deal also bars Chase's debt buyers from reselling consumer debts to other purchasers, the authorities said.

The CFPB, 47 states and the District of Columbia joined in the settlements, which were first reported by Reuters on Tuesday.

California and Mississippi, which have lawsuits against JPMorgan over its debt collection practices, did not participate. Nor did Wyoming, authorities said.   Continued...

A view of the exterior of the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City, May 20, 2015.  REUTERS/Mike Segar