Chase Settles Lawsuit over Debt Collection

Chase Settles Lawsuit over Debt Collection

Posted By Golomb & Honik, P.C. || 7-Dec-2015

After reaching settlement agreements with 47 other states earlier this year, JPMorgan Chase recently settled with the state of California to the tune of $50 million. The settlement agreement states Chase used abusive and illegal debt-collection practices to extract money from credit card customers in the state. This deal is the final step in a lawsuit filed by California Attorney General, Kamala Harris, in 2013. Harris says that between 2009 and 2013, Chase sold settled debts to collectors, filed over 125,000 collections lawsuits against California residents (using “robo-signed” documents) and miscalculated the debts owed by consumers.

Allegations also included that Chase sent threatening letters to consumers and sought default judgments against active-duty military members who were also part of the settlement agreement. Harris asserted that such abusive debt-collection practices would not be tolerated in the state of California, and that the settlement would provide relief to “tens of thousands of Californians, including service members.”

Chase Agrees to Conditions Which Will Govern Debt Collections Practices

In addition to the state penalties which will be assessed against JPMorgan Chase, the company will pay about $10 million to those California consumers affected by unfair debt-collection practices. In California, as well as in the other states which have settled with Chase, the bank has agreed to conditions which will govern how it collects debts or sells debts to outside collections. One of those conditions is that firms which purchase Chase consumers’ defaulted credit card debts must have all the information necessary to prove the debt actually exists.

Many consumers are unable to fight such debts in court because they are unaware of their rights, even though the bank may have provided debt collectors with incomplete or inaccurate information. Chase Bank, although paying out millions in settlements across the United States, has admitted no wrongdoing. In total, including the California settlement, Chase is on the hook for more than $250 million so far. JPMorgan Chase will also pay another $50 million in penalties to California as a means of settling a 2013 lawsuit. Military members in the state of California will be reimbursed in cases where Chase improperly obtained default judgments; the state claims Chase neglected to check to see if customers were on active military duty, yet swore they had done so.

Threats and Inaccurate Allegations

Apparently letters were sent to consumers which contained illegal threats signed by attorneys who failed to review the allegations for accuracy. These threats were made in violation of California’s Fair Debt Collection Practices Act. As part of this settlement, Chase must permanently halt collections attempts on more than 528,000 customer accounts. Chase must also document and confirm debts prior to filing collection lawsuits or selling consumers’ credit card debts to debt-collection companies. Robo-signing court and other documents is also now prohibited.

Nevada Residents See Similar Agreement with Chase

The state of Nevada inked a similar settlement last summer with Chase. Nevada residents were subjected to the same practices as consumers in California, with settled debts being sold to debt collection agencies, consumers being dunned for accounts which were not theirs, and even collection for debts in the wrong amounts. Lawsuits filed against customers were based on inaccurate documentation, prepared and “robo-signed,” just as with those in California. Customers’ credit ratings were damaged making it difficult for thousands of consumers to get a job, obtain credit, qualify for a mortgage or even obtain insurance.

Protections for Consumers

Consumers are currently protected under the Federal Fair Debt Collection Practices Act as well as fair Debt Collection Practices Acts in each state. These Acts give consumers the right to request verification of a debt, only be contacted between 8 in the morning and 9 at night, ask that all communications between consumer and debt collector be stopped, not be contacted at work and not be harassed by the debt collector. If your rights in these areas have been violated, a consumer rights attorney in your state can help you sue the debt collector for violating federal and state laws.

Contact Our National Consumer Protection Lawyers

If you have experienced a dispute with your financial institution and are unable to reach a mutually agreeable resolution, it is imperative that you seek legal representation immediately. Contact the national consumer protection lawyers at Golomb & Honik, P.C. today at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form. We have successfully fought credit card companies, banks, and financial institutions and protected consumer rights for decades. Call us today to review your case.

The national consumer protection lawyers at Golomb & Honik, P.C. have successfully represented individuals in Philadelphia, Pennsylvania, New Jersey, and throughout the United States.

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