JPMorgan Chase & Co. (NYSE:JPM) agreed to pay $166 Million to settle a lawsuit alleging that the company has been employing illegal tactics to collect debt.
The announcement was made by the Consumer Financial Protection Bureau which suggested that the company had been illegally depending on signing many documents without verifying the information within the particular accounts. JP Morgan, therefore, submitted inaccurate data to third party debt collectors when it handed over the accounts. The CFPB also reported that the company had filed lawsuits using the misleading information that was used to obtain rulings in their favor.
The practice was particularly performed on accounts that were uncontrollable, discharged in bankruptcy or paid off. Richard Cordray, the director of CFPB stated that Chase was guilty of selling bad credit card debt and that the company had also robo-signed the documents in violation of the law.
Under the terms and agreements of the settlement, Chase is expected to pay $136 million in fines to the Bureau, District of Columbia and 47 states. The company will also refund at least $50 million to the affected customers. Chase will also permanently stop collecting debt from528,000 accounts.
The bank is also expected to pay a separate penalty of $30 million to the Office of the Controller of Currency. The settlement agreement also dictates that chase should change the way it handles delinquent accounts. Also, any accounts sold by Chase cannot be resold after that. The agreement also decrees that chase should verify any individual account that it sells to a debt collection agency. This is to make sure that the debts are valid. The bank will also be expected to notify the delinquent account holders when their accounts are sold.
So far, the bank has paid back more than $50 million to its customers, as part of a previous agreement with federal regulators. It was also as a result of debt malpractices in 2013. In one of their statements, JPMorgan Chase & Co. (NYSE:JPM) announced that it was happy to clear up the legacy issues.