Chase Debt Collection Investigations May Not be Over

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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.

Continuing the Discussion

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  • avatar don mckelvey says:

    High time Chase was held accountable and someone should go to jail.

  • avatar Eileen Corrice says:

    So glad I cashed in my pension with them last month. In the meantime, another example of banks too big to function. I was in banking until 1990. At that time, we reviewed all documents and signed them with a pen. Imagine that!

  • avatar Linda Almonte says:

    I would say far from over several current and former employees have told me that they received phone calls from Chase asking if they have been contacted or subpeoned by any regulators or Attorney Generals and if so Chase is there for them and will give them an attorney to speak for them. Several responded why?? I am with the AG’s and Regulators who do I call for one of these subpeona’s everyone is talking about?

  • avatar william-klecter says:

    Three negative comments about Chase so far (and even one using the name of the “whistle blower”). I don’t get it. Chase is a good bank. I know many Chase employees – they aren’t trying to hurt anyone. If they did something wrong, they’ll fix it. And what’s wrong with a Bank…or any business, for that matter…trying to grow and make money? That’s what businesses are supposed to do! Come on, folks. Chase-bashing is like rubber-necking or whatching TMZ – its as though you enjoy watching something fail just for the sake of it failing. I don’t get it. As one of the nation’s largest employers and with millions and millions of satisfied customers, I hope you continue to do well, Chase.

  • avatar Commercial Guy says:

    I don’t think that the problem, William (cute screen name, BTW), is with Chase employees. It seems to me that this is a pervasive, top-down set of policies and procedures that are designed to maximize profits with little or no regard for laws or regulations. Leaving totally aside the “London whale” issue, what you have is a huge bank that regularly, as a matter of policy, robo signed foreclosure documents, robo signed affidavits for credit card suits and, for a period of 7 years, “sold” identity theft products to customers that were defective in one form or another.

    This is definitely not a case of the poor, poor bank being abused by customers and the general public (if there is such a thing). This is a case of supreme arrogance by an institution that firmly believes it is “too big to fail”, and that obviously knows that what it is required to pay out, if and when it is caught, is a minor factor compared to what these tactics bring in.

    I have been in the ARM industry for nearly 35 years; I am proud of what I do, and of how I do it. As for Chase (and any other institution condoning or using these practices), the sooner they start holding executives responsible for their actions the better.

  • avatar william-klecter says:

    I, too, have been in the ARM industry for over 30 years now and run a very tight, compliant ship. And I still, respectfully disagree. All companies are made up of people – and the people I know at Chase are not just bank tellers, they are decision makers, and even a few power players, within the bank. I’ve even heard Jamie Diamond speak to a small group once. These people all want to do the right thing. They aren’t creating policies meant to do harm. They don’t have horns & tails, and they don’t belong to secret groups planning to overthrow the world.

    Back to the point, though. The main thrust of my comment was simply how people love to see things fail. It’s a human thing, I think. Tiger Woods, Dallas Cowboys, Ben & Jenn, Bill Clinton, JP Morgan Chase. People are fascinated by the collapse of something big – and for no good reason.

    At the same time, I’m not going to condone illegal and/or deceptive practices, but if I’ve learned anything in my time in this industry it’s that there’s no simple argument and nobody is ever 100% right. It’s always much more complicated than that, and so is this whole “too big to fail” nonesense.

    Said another way, I think we’d all agree that cheating the US Government out of money is wrong. Right? And yet they say better than 90% of American “fudge” their tax returns in order to get more/owe less…probably for the same reason Commercial Guy states Chase may have used some questionable practices – the likely lack of consequence. So is it the “supreme arrogance” of 90% of us that causes us to fudge on our taxes, or a conscious decision to make a choice about our available wealth? Same for Chase in my eyes. If people don’t like it, change the rules…but don’t blame the Bank. Hate the sin, not the sinner, as they say.

    I could argue either side of this issue, to be really honest, but someone needs to stay on this side of the fence. I respect your position, Comm’l Guy, but I’m not going to drink your Cool-Ade. There are many shades of grey, and Chase is not a bad company.

  • avatar Commercial Guy says:

    Sorry, but I can’t buy into the whole “Everyone is doing it, so I might as well do it too”. I don’t think I’ve ever heard the 90% figure used seriously before in discussing possible tax cheats. The figures I have seen before generally estimate the number between 30% and 40%. A significant number of these make less than $25K per year, which accounts for the large percentage of audits falling in this income group. Frankly, the idea that someone in this income group fudges a little to increase his or her tax return by $300-$400 doesn’t cause me nearly the level of irritation as does a systemic attempt to take that amount out of millions of citizen’s pockets solely to enhance the bottom line of a corporation.

    As for the people all wanting to do the right thing, when you are referring to the C-Suite of a Fortune 100 company, it is a question of who they want to do the right thing for…it surely isn’t for me or the other people out here who are trying to make a living in a struggling economy. Could it be the right thing for the major stockholders and the Board of Directors? That’s a possibility, since they are the ones who determine if the top executives stay or go as well as their level of compensation; if I’m not mistaken, this is virtually always tied to profits and/or stock price at that level.

    “Hate the sin, not the sinner”…sure, no problem. However, unless you are going to subscribe to the idea that punishment for the sinners will come in the next life, then something should be in place to set examples for those who are thinking of sinning in the future. Otherwise, the perpetrators will multiply and so will the sins.

  • avatar william-klecter says:

    Use your 30-40% figure for tax cheats. Even use your $25k per year annual income and a $300-400 increase in return. You’re still talking over 1% of their wealth. That’s even MORE than what you’re claiming Chase did. As I stated before, I see it as all relative.

    And forget the Fortune 100 companies for a moment. Let’s instead talk about the owner of your barber shop or car wash. Who are you claiming benefits from the decisions he/she makes? You think its not the barber shop or the car wash?

    Absolutely no offense meant, but there’s much naivety in your argument, and that goes right to my point about people wanting to see the big things fail…even when it’s to their own detriment. That’s all this is. The bigger the scale the more people pile on. But that’s so short sighted. Just my opinion, of course.

    Still, like the barber shop that uses expired hair products or the car wash that didn’t properly recycle their water, I’m sure Chase will face consequences, of course. But just because they’re bigger doesn’t make them bad. And that’s my whole point. It’s all relative.

  • avatar BHA LLC says:

    the corner cutting keeps the costs of collecting from deadbeats low enough to justify handing out credit.

    the problem is once again TOO BIG
    depending too much on computers to spit out numbers…not enough eyes on documents…not that they actually did anything shady.

  • avatar john pratt says:

    If, and that’s important, if Chase robo signed or more importantly robo notarized affidavits then in my opinion that is wrong if the affidavit was used in a court proceeding. It does not mean the consumer does not owe the money. A robo signed notarized affidavit cannot be used in a court proceeding. Yes, one can copy a notarized statement if a true, sworn to statement exists. To notarize one affadvit and have someone swear to it and sign their name and then copy that a million times and then use those to obtain a judgment is wrong. We want the consumer to play by the rules. I think we must play by them too. Debt Buyers or anyone who used those documents, if they did, should have known that this might end up badly. Folks should have known. If this happened I expect we may see a lot of judgments overturned.

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