SACRAMENTO, Calif. (AP) - The nation's largest bank will pay $100 million to settle a California lawsuit alleging it used illegal methods to collect debts from more than 125,000 credit card holders, the state's attorney general announced Monday.
SACRAMENTO, Calif. (AP) — The nation's largest bank will pay $100 million to settle a California lawsuit alleging it used illegal methods to collect debts from more than 125,000 credit card holders, the state's attorney general announced Monday.
JPMorgan Chase & Co., the largest U.S. bank by assets, will pay an estimated $10 million to consumers in California as part of a previously announced $50 million national agreement, and will pay another $50 million in penalties to the state to settle a 2013 lawsuit.
It is agreeing to change practices that the state says violated California law and led the company to file thousands of debt collection lawsuits between 2008 and 2011. They include collecting incorrect amounts, selling bad credit card debt, and running what Attorney General Kamala Harris' office calls a debt collection mill that "robo-signed" court documents.
The deal includes reimbursing military members in California in cases where the company improperly obtained default judgments. The state says the company failed to check if customers were on active military duty but falsely swore it had done so.
"This settlement provides real relief to tens of thousands of Californians, including servicemembers, and prevents JPMorgan Chase from continuing these deceptive and illegal debt collection practices," Harris said in a statement.
JPMorgan Chase spokesman Paul Hartwick said the company reached a similar settlement with 47 other states' attorneys general in July. He provided a statement from that settlement that says the company stopped the practices years ago.
Among other allegations, the state said the company used illegal threats; sued borrowers based on insufficient evidence, betting that they wouldn't challenge the lawsuits; and failed to tell customers they were being sued while swearing they had been properly notified.
Harris said the company frequently "robo-signed" legal documents including sworn declarations without first reviewing the files as it rushed to obtain court judgments and wage garnishment orders.
The state said the company also provided 30,000 robo-signed sworn statements backing lawsuits filed by outside debt-collectors. Those accounts were often inaccurate or not collectable because the debt had been settled, discharged in bankruptcy or wasn't owed, the state said.
Robo-signing was also widely used in mortgage foreclosures until it was outlawed. JPMorgan Chase is one of five major national banks that settled with California and other states over such practices after the housing market collapsed.
As part of the lawsuit, the company is required to permanently stop attempting to collect more than 528,000 customer accounts valued at hundreds of millions of dollars.