Chase to pay more than $233,000 to West Virginia government, consumers as part if unlaawful debt collection practices

Updated 2 years ago From a News Release by WV Attorney General Patrick Morrisey
CHARLESTON W.Va. – Attorney General Patrick Morrisey announced a settlement with Chase Bank USA and its Chase Bankcard Services Inc. subsidiary that resolves and reforms the companies’ unlawful credit card debt collection practices.

 
As part of the settlement, Chase will pay $219,153.72 to the state of West Virginia and $14,000 in restitution to 15 West Virginia customers. It will also cease collection efforts for 643 state residents.
 
The state settlement was part of a $136 million joint federal-state agreement negotiated as part of a cooperative effort between Attorney General Morrisey, the Attorneys General in 46 other states and the District of Columbia, and the Consumer Financial Protection Bureau. The agreement follows an investigation into Chase’s past debt collection practices.
 
“This agreement marks a significant milestone in our Office’s effort to fight back against unlawful and abusive debt collection practices,” Attorney General Morrisey said. “Harassing debt collection calls remain one of the top complaints we receive from consumers across the state, and I hope this settlement sends a clear signal that we will not tolerate these abusive, unlawful practices.”
 
In the settlement, the Attorneys General and Consumer Financial Protection Bureau allege Chase stacked the deck against consumers by pursuing or unleashing collections cases based on information that was wrong or 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.’
 
Agreement Requires Debt Collection Reforms
 
The agreement requires Chase to significantly reform its credit card debt collection practices, including the development of new safeguards to help ensure debt information is accurate and inaccurate data is corrected. It also prevents debts Chase has previously sold to third parties from being sold again.  
 
Investigation Uncovered Unlawful Debt Collection Practices
 
According to the joint state-federal probe, Chase:
  • Subjected consumers to collections activity for accounts that were not theirs, in amounts that were incorrect or uncollectable.
  • Subjected consumers to inaccurate credit reporting and unlawful judgments that may affect consumers’ ability to obtain credit, employment, housing and insurance in the future.
  • Sold certain accounts to debt buyers that were inaccurate, settled, discharged in bankruptcy, not owed by the consumer, or otherwise uncollectable.
  • Filed lawsuits and obtained judgments against consumers using false and deceptive affidavits and other documents that were prepared without following required procedures, a practice commonly referred to as “robo-signing.” These practices misled consumers and courts and caused consumers to pay false or incorrect debt 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.
“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,” Attorney General Morrisey 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.”
 
Chase to Cease Collecting on 528,000 Consumers
 
Chase has agreed to cease all collection efforts on more than 528,000 consumers, including 643 in West Virginia. 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.
 
Consumer Restitution
 
The agreement also ensures that Chase will fulfill $50 million in consumer restitution through a separate 2013 consent order reached with the Office of the Comptroller of the Currency. Chase estimates that so far it has provided $14,000 in restitution to 15 West Virginia consumers.
 
If Chases’ consumer restitution through the OCC action falls short of $50 million by July 1, 2016, Chase must pay the remaining balance to state attorneys general and the CFPB.
 
Payment to States and CFPB
 
Chase will pay more than $95 million to the 47 participating states and the District of Columbia, an additional $11 million to the executive committee states that conducted the investigation and settlement negotiations, and $30 million to the CFPB. West Virginia’s share is $219,153.72.
 
Participating States
The following state attorneys general are participating in the Chase settlement: Alaska, Alabama, Arkansas, Arizona, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin.
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