We’ve had quite a few questions regarding the announcement late last week of a consent order between JP Morgan Chase and the Office of the Comptroller of the Currency (OCC) regarding the bank’s debt collection and sales practices. So here is a rundown of what happened last week and what is still floating out there.
Chase settled charges related to its debt collection practices with the OCC, and only the OCC. The consent order did not include any monetary penalties or fines. There is confusion about this because so many headlines in other media featured dollar figures. And with good reason: Chase actually settled three matters simultaneously.
In addition to the OCC/debt collection investigation, Chase settled a joint OCC and CFPB investigation into its identity theft protection product marketing. That case involved a hefty penalty and compensation to be paid to consumers. The bank last week also settled charges related to its “London whale” trading debacle of 2012. That matter involved a laundry-list of regulators, including the SEC, Federal Reserve, and UK financial regulators. It also carried massive penalties and fines.
But there are still ongoing investigations into Chase’s credit card debt collection operations, especially as they relate to debt sales and litigation.
The CFPB’s independent probe is still open. Two weeks ago, sources told Bloomberg news that the case was close to settling and that there would be financial penalties.
In addition to the CFPB investigation, several state attorneys general have launched actions related to Chase’s debt collection activity. California AG Kamala Harris sued JP Morgan Chase in May, accusing the bank of robo-signing affidavits related to debt collection lawsuits. The Wall Street Journal Monday reported that Massachusetts AG Martha Coakley has done the same. And finally, Iowa Attorney General Tom Miller is heading an investigation involving 13 state AGs that is separate from the California and Massachusetts matter.
So why should the third party debt collection industry care? These investigations are likely to change the practices at nearly all banks, not just Chase. As we noted late last week, debt collection attorneys and debt buyers are going to be impacted the most directly. So it is in the ARM industry’s best interest to closely follow the cases as they develop.