On Wednesday, the Consumer Financial Protection Bureau (CFPB) and Attorneys General in 47 states and the District of Columbia initiated action against multinational bank JPMorgan Chase, alleging the sale of bad credit card debt and the illegal robosigning of court documents.
The CFPB and states found that Chase sold "zombie debts" to third-parties, which were filled with accounts that were inaccurate, settled, discharged in bankruptcy, or otherwise not collectible. The practices put Chase in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
"Chase sold bad credit card debt and robo-signed documents in violation of law," CFPB Director Richard Cordray said in a written statement. "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."
The action filed by the CFPB requires Chase to document and confirm debts before any sale is made. Additionally, the bank is ordered to stop all attempts to collect, enforce in court, or sell more than 500,000 consumers' accounts.
Chase will pay at least $50 million in refunds, $136 million in payments and penalties to the CFPB and states, and a $30 million penalty to the Office of the Comptroller of Currency (OCC).