CHARLESTON - Attorney General Patrick Morrisey announced a settlement has been reached with Chase Bank USA and one of its subsidiaries that resolves and reforms unlawful credit card debt collection practices.
Chase Bank USA and Chase Bankcard Services Inc. will pay $219,152.72 to the state and $14,000 in restitution to 15 West Virginia consumers, according to the settlement, which was announced on July 8 by Morrisey's office.
Chase will also cease collection efforts for 643 state residents.
The settlement with the state is part of a $136 million joint federal-state agreement negotiated as part of a cooperative effort between Morrisey and the attorneys general in 46 other states and the District of Columbia, as well as with the Consumer Financial Protection Bureau.
The agreement follows an investigation into Chase’s past debt collection practices.
"This agreement marks a significant milestone in our Office’s effort to fight back against unlawful and abusive debt collection practices," Morrisey said in a press release. "Harassing debt collection calls remain one of the top complaints we receive from consumers across the state, and I hope this settlement sends a clear signal that we will not tolerate these abusive, unlawful practices."
The attorneys general and CFPB alleged that Chase stacked the deck against consumers by pursuing or unleashing collections cases based on information that was wrong or false, according to the settlement.
The attorneys general office said these practices include instances where the listed debt was the wrong amount, was tied to the wrong person, was discharged, time barred or very old -- what’s often called "zombie debt."
The settlement agreement requires Chase to significantly reform its credit card debt collection practices, including the development of new safeguards to help ensure debt information is accurate and inaccurate data is corrected.
It also prevents debts Chase has previously sold to third parties from being sold again.
Chase allegedly subjected consumers to collections activity for accounts that were not theirs, in amounts that were incorrect or uncollectable; subjected consumers to inaccurate credit reporting and unlawful judgments that may affect consumers’ ability to obtain credit, employment, housing and insurance in the future; and sold certain accounts to debt buyers that were inaccurate, settled, discharged in bankruptcy, not owed by the consumer, or otherwise uncollectable.
Chase also allegedly filed lawsuits and obtained judgments against consumers using false and deceptive affidavits and other documents that were prepared without following required procedures, a practice commonly referred to as "robo-signing."
These practices misled consumers and courts and caused consumers to pay false or incorrect debt and incur legal expenses and court fees to defend against invalid or excessive claims.
"While Chase is certainly entitled to collect lawfully on unpaid debts, our laws forbid anyone from using false or incorrect amounts or robo-signing documents," Morrisey said. "Though the unlawful debt collection practices we allege have stopped, this enforcement action holds Chase accountable for its past practices, provides restitution to harmed consumers, and we fully expect that it will ensure that this won’t happen again."
Chase agreed to cease all collection efforts on more than 528,000 consumers, including 643 in West Virginia.
Chase sued the affected consumers for credit card debts and obtained judgments between January 1, 2009, and June 30, 2014.
Chase will notify affected borrowers of the change and will request all three major credit reporting agencies to not report the judgments.
The agreement also ensures that Chase will fulfill $50 million in consumer restitution through a separate 2013 consent order reached with the Office of the Comptroller of the Currency.
If Chases’ consumer restitution through the OCC action falls short of $50 million by July 1, 2016, Chase must pay the remaining balance to state attorneys general and the CFPB.
