Chase Bank to pay $136 million for unlawful debt collection

Chase Bank to pay $136 million for unlawful debt collection

By / State News / الأربعاء, 15 تموز/يوليو 2015 04:00

RALEIGH, N.C. : July 8th, 2015 - Chase Bank will change the way it collects on credit card debt and pay $136 million for past unlawful collection practices including $1.8 million to North Carolina, Attorney General Roy Cooper said Tuesday.
“Debt collections riddled with errors caused nightmares for consumers in North Carolina and across the country, including families faced with demands to pay debts they didn’t even owe,” Cooper said. “We took action to help consumers hurt by these predatory practices and prevent these problems from happening again.”
In addition to paying $1.8 million to North Carolina, Chase will stop trying to collect from more than 3,000 North Carolina consumers against whom it had filed suit. This is part of a $136 million national settlement that includes 46 other states, the District of Columbia, and the Consumer Financial Protection Bureau. The agreement resolves a joint state-federal investigation into Chase, which began in 2013.
Unlawful collection practices
The settlement holds Chase accountable for past collection practices that harmed consumers starting in 2009, including:
• Trying to collect payments from consumers for accounts that were not theirs.
• Miscalculating the amounts owed when filing debt collection lawsuits, sometimes resulting in judgments against consumers for incorrect amounts.
• Reporting inaccurate information and unlawful judgments that could negatively affect consumers’ credit and their ability to get jobs, housing and insurance.
• Selling accounts to outside debt collectors that included inaccurate information, had already been resolved, or were not owed by the consumer.
• Robo-signing false and misleading affidavits and other documents and using them to file lawsuits and obtain judgments against consumers. These improperly prepared documents misled consumers and courts and caused consumers to pay false or incorrect debts and unnecessary legal expenses.
“Legitimate debts must be paid, but debt collectors must follow the law and do their job fairly,” Cooper said. “These illegal tactics moved the goal posts, making it that much harder for North Carolinians to get out of debt or defend themselves from wrongful collections.”
Reforms to debt collection
The unlawful debt collection practices uncovered through the investigation have stopped, and today’s agreement requires reforms to make sure they do not happen again. The agreement requires Chase to reform its practices for declaring debts, filing collection lawsuits, debt sales and debt buying. Among other reforms, Chase must use new safeguards to help ensure debt information is accurate, inaccurate data is corrected, and consumers who owe debts get the information they need.
The agreement also bars debt buyers from reselling consumer debts purchased from Chase. Previously, initial buyers of Chase’s consumer credit card debt could resell the debt, the next buyer could flip the debt to another buyer, and the process could repeat itself many times over. If initial information about the debt was inaccurate, that could result in long-term harm to the consumer and make it difficult or impossible to correct the errors.
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. Under a 2009 state law backed by Cooper to curb abuses, in North Carolina debt buyers must prove that they have the right to enforce the debt and be able to verify the amount owed. Today’s settlement with Chase confirms the principle that entities who buy debt should be able to provide accurate proof of the debt when they bring collection suits against consumers.
Chase to stop collecting from 528,000 consumers, complete $50 million in refunds
Chase has agreed to stop its efforts to collect debts from more than 528,000 consumers, including approximately 3,016 in North Carolina. These are consumers who were sued by Chase over credit card s debt since January 1, 2009. Affected consumers will be notified of the change by Chase, and the company will request that all three major credit reporting agencies not report judgments it won on these consumers’ credit reports.
The agreement also requires Chase to complete a separate $50 million in refunds to consumer that it is supposed to provide under a 2013 consent order with federal banking regulators. So far, Chase reports that it has paid approximately $31 million in refunds, including $130,000 paid to 115 North Carolina consumers. If Chase fails to provide $50 million in restitution by July 1, 2016, today’s agreement requires it to pay the remaining balance to Cooper, the other state attorneys general and the Consumer Financial Protection Bureau.
Complaints and questions about debt collection
Debt collectors must follow state and federal laws, including the Fair Debt Collection Practices Act, which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from consumers. Consumers may also have the option of pursuing claims in state or federal court.
North Carolina consumers can file complaints against debt collectors with the Attorney General’s Consumer Protection Division. Consumers can call 1-877-5-NO-SCAM toll-free within state or visit www.ncdoj.gov  to complete a consumer complaint form and get tips on debt collectors.
Source: North Carolina Department of Justice.

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