State reaches debt collection agreement with Chase
JEFFERSON CITY - Attorney General Chris Koster announced Wednesday a settlement with Chase Bank to change its unlawful credit card debt collection practices.
Koster said the national settlement will provide relief to more then 2,400 customers in Missouri and 525,000 nationwide. Attorneys general in 47 states and the Consumer Financial Protection Bureau reached the $136 million joint state-federal settlement. Chase will pay over $910,000 to the state of Missouri.
"Chase's credit card debt-collection practices harmed thousands of consumers here in Missouri and across the country," Koster said. "Chase often used wrong or outdated information to pursue debts, including debts that had already been discharged. Chase must now change its business practices and treat consumers fairly in the future."
Koster said investigators found Chase pursued collections based on information that was incorrect or even false including times where the debt listed the wrong amount, was tied to the wrong person or was time barred.
Affected customers include those who were sued by Chase for credit card debts and obtained judgements between Jan 1, 2009, and June 30, 2014. Chase will notify those affected and request major credit reporting agencies to not report the judgements.
Chase estimated it has provided $120,000 in restitution to 115 Missouri consumers. The agreement will require Chase to significantly reform its debt-collection practices. It also requires new safeguards to ensure accurate information and that inaccurate information be corrected.
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 that were legally noncollectable.
- Subjected consumers to inaccurate credit reporting and unlawful judgments that may hurt 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 noncollectable.
- 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 debts 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.
The Attorney General said prohibiting the resale of debt is significant. Koster said previously initial buyers of Chase's consumer credit card debt could resell the debt, the subsequent buyer could flip the debt to a third buyer, and the process could repeat itself many times over. Transmitting incorrect information to subsequent buyers could result in long-term harm to the consumer, who would have the difficult or even impossible burden of correcting the errors.
Koster said debt collectors are bound by 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 who have complaints about unfair debt-collection actions should file a complaint with the Attorney General's Office online or by calling 800-392-8222.