For Immediate Release
Media Contact: Kriss Bivens Cloyd
(208) 334-4119

Date: July 8, 2015

Chase to Change Debt Collection Practices in $136 Million Joint State-Federal Settlement

(Boise) – Idaho Attorney General Lawrence Wasden says Chase Bank USA N.A. and Chase Bankcard Services, Inc. will reform their credit card debt collection practices as part of a $136 million joint state-federal settlement.

The agreement was reached through an assurance of voluntary compliance with Idaho and 46 other states, the District of Columbia and the federal Consumer Financial Protection Bureau.  The settlement follows an investigation into Chase’s past debt collection practices, Wasden said.

“Chase’s consumer credit card debt collection practices allegedly harmed consumers,” Wasden said.  “In too many instances, the company used inaccurate information to pursue collection cases.”

The states alleged, for example, that Chase misidentified debtors in its collections actions and tried collecting on wrong amounts and time barred debts.

As part of the settlement, the state of Idaho will receive an estimated $290,000. About 30 Idaho consumers harmed by Chase’s practices have already received about $25,500 in restitution.

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 others.

Among other reforms, the agreement requires new safeguards to help ensure debt information is accurate and inaccurate data is corrected, provides additional information to consumers who owe debts, and bars Chase’s debt buyers from reselling consumer debts to other purchasers.

Resale Prohibition
The resale prohibition is significant. Previously, initial buyers of Chase’s consumer credit card debt could resell the debt, the subsequent buyer could flip the debt to another buyer, and the process could repeat itself many times over.  If initial information about the debt was incorrect or was transmitted with errors to a subsequent debt buyer, that could result in long-term harm to the consumer and leave the consumer with the difficult or even impossible burden of successfully challenging or correcting errors.

Investigation Uncovered Unlawful Debt Collection Practices
According to the joint state-federal probe, Chase allegedly:

  • 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.

“This enforcement action provides restitution to harmed consumers and ensures that this kind of activity won’t be repeated,” Wasden said.

Chase to Cease Collecting on 528,000 Consumers
Chase has agreed to cease all collection efforts on more than 528,000 consumers, including an estimated 715 in Idahoans.  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 ensures that Chase will pay $50 million in consumer restitution through a separate 2013 consent order reached with the Office of the Comptroller of the Currency.

Consumers with Debt Collection Questions or Complaints
Debt collectors are bound by state and federal laws, including the Fair Debt Collection Practices Act (FDCPA), 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.

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