Deceptive Credit Card Collection Practices Come to an End

Thousands of Chicagoans become victims of unfair and deceptive credit card collection practices every year. In many cases, Illinois residents who filed for Chapter 7 bankruptcy and received a discharge of their unsecured debts, including the debts they accrued on credit cards, will receive collection calls about those very same credit card debts. According to a recent article in The New York Times, “the Consumer Financial Protection Bureau (CFPB) and the attorneys general of 47 U.S. States and Washington, D.C. brought an enforcement action against JPMorgan Chase for abuse, deception, and unfairness in credit card collection cases.”
Bank’s Failure to Comply with the Law
If you had your credit card debts discharged in bankruptcy, you shouldn’t be receiving collection calls about the money you allegedly owe. However, hundreds of thousands of credit card accounts were not handled properly by the bank. According a news release from the CFPB, the agency identified the following issues at Chase:
  • Chase sold bad debts. The bank “sold certain accounts that had already been settled by agreement, paid in full, discharged in bankruptcy, identified as fraudulent and not owed by the debtor, subject to an agreed-upon payment plan, no longer owned by chase, or that were otherwise no longer enforceable.”
  • The bank helped third-party debt buyers to collect those bad debts by providing “inadequate or incorrect information.”
  • By robo-signing more than 500,000 debt-collection lawsuits against consumers, Chase “systematically failed to prepare, review, and execute truthful statements as required by law.” Numerous debt-collection lawsuits also included calculation errors made by the bank, which “resulted in judgments against consumers for the correct amount.”
  • When Chase learned of errors involving debt collection, it failed to notify the consumers affected by the bank’s mistakes.
According to an e-mailed statement from Illinois Attorney General Lisa Madigan explaining what she supported the enforcement action, “this is another massive failure by Chase to comply with the law.” As Madigan emphasized, “Chase’s shoddy practices disrupted the financial stability of nearly 50,000 people in Illinois struggling with their credit-card debt in the wake of the economic crisis.”
Remedy for Debt Collection Problems
What does the enforcement action require JPMorgan Chase to do in order to remedy its bad actions and omissions? The enforcement actions requires the bank to:
  • Stop collections on 528,000 accounts.
  • Pay cash refunds to consumers who had pending litigation between January 1, 2009 and June 30, 2014. Those amounts must be any sum above what the consumer actually owed at the time the debt was referred to litigation plus an additional “25 percent of the excess amount paid.”
  • Prohibit debt buyers from reselling accounts purchased from Chase (unless it’s back to Chase).
  • Confirm the validity of consumer debts before selling them or filing a lawsuit.
  • Notify consumers about their debts being sold while also providing them with additional information about their accounts.
  • Stop selling “zombie debts,” including those discharged through bankruptcy.
  • Withdraw or dismiss or terminate certain litigation pending after January 1, 2009.
  • Cease robo-signing practices.
  • Pay a civil penalty of $30 million.
Banks and other creditors must abide by the terms of the Fair Debt Collection Practices Act (FDCPA). If you believe you have been treated unfairly by a debt collector, particularly if you are being harassed about debts discharged through a Chapter 7 bankruptcy, you should discuss your case with an experienced Oak Park consumer protection attorney.
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