DeWine, 47 AGs announce $136 million settlement with Chase over credit card collections

COLUMBUS – Ohio Attorney General Mike DeWine today announced that Chase has agreed to reform its credit card debt collection practices and permanently stop collection efforts on over half a million consumers as part of a $136 million joint federal-state settlement.

The settlement with Chase Bank USA N.A. and Chase Bankcard Services Inc. (collectively Chase) was reached by the attorneys general of 47 states and the District of Columbia, and the federal Consumer Financial Protection Bureau, following an investigation into Chase’s past debt collection practices.

“Chase has agreed to make a number of significant reforms that will help protect consumers now and in the future,” DeWine said. “As a result of this settlement, Chase customers will be less likely to be sued for a debt they don’t owe or receive third-party collection calls for a debt they already paid off.”

The investigation looked at Chase’s internal debt collection practices and its sales of consumer credit card debt to third-party debt buyers. It found that in some cases Chase filed lawsuits and obtained judgments against consumers using documents that were “robo-signed” (signed without personal knowledge of the signer) or based on inaccurate information. In other cases, Chase sold accounts that were inaccurate, already discharged, or otherwise uncollectable to debt buyers.

The settlement requires Chase to implement new safeguards to help ensure debt information is accurate and to provide additional information to consumers who owe debts.

Significantly, the settlement also prohibits Chase’s debt buyers from selling consumer debt to other buyers. Previously, initial buyers of Chase’s consumer credit card debt could resell the debt to another buyer, then 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 transmitted with errors to a subsequent debt buyer, it could become difficult or even impossible for the consumer to successfully challenge or correct errors.

Chase also has agreed to cease all collection efforts on more than 528,000 consumers, including an estimated 14,400 in Ohio. Chase sued the affected consumers for credit card debts between Jan. 1, 2009, and June 30, 2014. If Chase obtained a judgment against a consumer, Chase will notify the affected consumer that Chase will not seek to enforce the judgment, and will request all three major credit reporting agencies to not report the judgments on the consumers’ credit reports.

Under the settlement, Chase will pay over $95 million that will be distributed among the attorneys general of the 47 participating states and DC, plus an additional $11 million that will be distributed to Ohio and the other executive committee states that conducted the investigation and settlement negotiations. Ohio’s total share is about $4.5 million. An additional $30 million will go to the Consumer Financial Protection Bureau.

The attorneys general of the following states and district are participating in the settlement: Alaska, Alabama, Arkansas, Arizona, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.

A copy of the Ohio settlement is available on the Ohio Attorney General’s website.