JPMorgan Chase has agreed to pay more than $200 million to settle claims by federal and state authorities that the megabank wrongfully collected credit card payments on hundreds of thousands of consumers.
The Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, and attorneys general in 47 states plus Washington D.C. announced the massive settlement Wednesday. The deal, which specifically targets the company's Chase Bank and Chase Bankcard Services units, requires them to stop collecting debt on more than 528,000 consumers and from reselling debt.
JPMorgan has agreed to pay at least $50 million to refund customers, $136 million in penalties and other payments, and a $30 million in a related action brought by the Office of the Comptroller of the Currency.
"There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes the biggest multi-national financial institutions," New York Attorney General Eric Schneiderman said in a press release. "Chase's consumer credit card debt collection practices were harmful to families when it pursued collections cases based on false and outdated information. In some cases the listed debt was the wrong amount, was associated with the wrong person, had previously been discharged, or was a time barred or very old 'zombie' debt."
In a press release issued by the CFPB, agency Director Richard Cordray said the company "sold bad credit card debt and robo-signed documents in violation of law."
"Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices," Cordray said. "We will continue to be vigilant in taking action against deceptive debt sales and collections practices that exploit consumers."
JPMorgan had already reached an agreement with the OCC in 2013 that included paying $50 million in restitution to consumers. The newest multiagency order says that if the company does not pay all of the $50 million by July 2016, it must pay the remainder to the CFPB and state AGs.
In a company-issued statement, Chase said it has addressed most of the issues raised in the order.
"Chase has taken extensive steps over the past four years and is pleased to resolve these legacy issues. It is working to complete remediation of affected Card customers," the company said. "The 2015 consent order covers issues from several years ago for a small percentage of credit card credit card customers who defaulted on their credit card debt. The issues were discovered by Chase in internal reviews that began in 2010."