Richard Cordray, director of the Consumer Financial Protection Bureau, said Wednesday the bureau levied serious penalties against JPMorgan Chase Bank for allegedly selling bad credit card debt to third party debt buyers. Consumer Financial Protection Bureau
A national bank was hit with serious fines and penalties by the U.S. Consumer Financial Protection Bureau (CFBP) for allegedly selling bad credit card debt to third-party debt buyers, said Richard Cordray, director of the CFPB.
JPMorgan Chase will pay $50 million in consumer refunds, $136 million in penalties to the CFPB, and about $30 million in a penalty to the Office of the Comptroller of the Currency. Cordray said the bureau found Chase sold “zombie debts” to the third parties, and included accounts that weren't accurate, were settled, discharged in bankruptcy, not owed, or otherwise uncollectible.
“Chase sold bad credit card debt and robo-signed documents in violation of law,” Cordray said. “Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices. We will continue to be vigilant in taking action against deceptive debt sales and collections practices that exploit consumers.”
Additionally, the CFPB also said Chase must stop debt buyers from reselling the debt it bought, and is also barred from selling other debts, Cordray said.
The CFPB alleged the bank sold the debts from 2009 to 2013 and was responsible for verifying the debts when the company, or a third part debt buyer, filed a lawsuit to collect on credit card debts.