Chase Bank and Chase Bankcard Services Inc. has settled litigation regarding it’s credit card debt collection practices through a $136 million joint state-federal settlement with Attorney General Tom Miller, attorneys general in 47 states plus the District of Columbia, and the Consumer Financial Protection Bureau. Iowa’s Attorney General Tom Miller was the lead state attorney general.
Chase agreed to cease all collection efforts on more than 528,000 consumers, including an estimated 1,329 in the state of Iowa. Chase sued the affected consumers for credit card debts and obtained judgments between January 1, 2009 and June 30, 2014. Chase will notify affected borrowers of the change and will request all three major credit reporting agencies to not report the judgments.
“Chase’s consumer credit card debt collection practices harmed consumers here in Iowa and across the country,” Miller said. “In many cases, Chase stacked the deck against consumers by pursuing or unleashing collections cases based on information that was just plain wrong or even false. These include instances where the listed debt was the wrong amount, was tied to the wrong person, was discharged, time barred or very old—what’s often called ‘zombie debt.’ It’s an affront to consumers, courts, our laws and fairness.”
According to Miller’s office, the agreement requires Chase to significantly reform its credit card debt collection practices in areas of declarations, collections litigation, debt sales and debt buying. Debt buying involves the sale of debt by creditors or other debt owners, often for pennies on the dollar, to buyers who then attempt to collect the debt at full value or sell it to other buyers. Previously, initial buyers of Chase’s consumer credit card debt could resell the debt, the subsequent buyer could sell the debt to another buyer, and the process could repeat itself many times over.
Chase suspended its consumer credit card debt sales in 2013 and collections litigation in 2011. In 2012 Chase maintained approximately 64.5 million open accounts with $124 billion in outstanding credit card debt. From 2009-2013, Chase recovered approximately $4.5 billion of debt from defaulted accounts through collection lawsuits, selling defaulted accounts to third-party debt buyers, or both.
“While Chase is certainly entitled to collect lawfully on unpaid debts, our laws forbid anyone from using false or incorrect amounts or robo-signing documents,” Miller said. “Though the unlawful debt collection practices we allege have stopped, this enforcement action holds Chase accountable for its past practices, provides restitution to harmed consumers, and we fully expect that it will ensure that this won’t happen again.