There’s nothing that American consumers like better than to see a major Wall Street financial institution put in its place, and consumers certainly got some entertainment out of the latest court ruling that cracked down on J.P. Morgan Chase and Co., resulting in a $136 million settlement for abuses on credit and debit card collections.
According to USA Today and the Wall Street Journal, state and federal authorities began investigating the banking conglomerate after discovering possible “legal violations in…. the sale of credit card debt that affected hundreds of thousands of U.S. consumers.”
The settlement was announced on July 7 and was confirmed by J.P. Morgan, the Consumer Financial Protection Bureau (CFPB), and several other state attorneys general.
The WSJ reported that J.P. Morgan has been “relying on robosigning and other methods of collecting debt from consumers that they may not have owed and [it provided] inaccurate information to debt buyers.”
The CFPB stated that consumers in 47 states and the District of Columbia were affected by these practices of “zombie debts” — i.e., debts which didn’t exist or were not collectible but which J.P. Morgan sold to third-party buyers.
The settlement includes $95 million paid directly to affected consumers, $30 million to the CFPB, and $11 to the states that had officials involved in the investigation and states in which the settlement talks were held.
Additionally, J.P. Morgan agreed to halt its collection efforts on more than 528,000 consumers who had been sued for credit card debts or received debt judgments between January 1, 2009 and June 30, 2014.
It is worth noting, however, that countless consumers have already been unfairly punished by the bank, and the settlement money paid directly to consumers may not be enough for some families. In 2010, nearly one-third of American families had at least four credit cards, and being targeted by debt collectors for just one credit card is enough to cause serious financial damage.
Nevertheless, it’s one step that could change the way major financial institutions think about their customers — and it will serve as an example to other banks that if they are going to target customers, they’ll be punished eventually.
“There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes the biggest multi-national financial institutions,” said Eric Schneiderman, New York Attorney General.
J.P. Morgan’s response seemed a little less than genuine: “We are pleased to resolve these legacy issues and are working to complete our remediation of affected credit card customers,” the bank stated.