After a $136 million settlement to the Consumer Financial Protection Bureau (“CFPB”) along with Attorneys General in 47 states and the District of Columbia over violations related to sale and collection of credit card debt in July this year, JPMorgan Chase & Co. JPM will now have to shell out $50 million in compensation to customers and another $50 million in fines to the state of California over similar charges.
California was not among the 47 states, which penalized JPMorgan more than $200 million in July. Though the settlement still requires court approval, it will mark the end of a 2013 lawsuit, which accused JPMorgan of using illegal methods to collect debts from over 125,000 credit card holders.
JPMorgan came under the regulatory radar for selling bad credit card debt as well as illegal collections practices, which impacted several thousands of customers. The bank allegedly provided inaccurate information to debt buyers and used robo-signing methods – the signing of large quantities of documents without verifying data.
JPMorgan is said to have improperly obtained default judgments against military personnel on active duty and sent threatening letters to customers. Moreover, the bank allegedly adopted unfair and deceptive measures in order to collect on defaulted credit card debts. Thus, the company violated state and federal laws.
"This settlement provides real relief to tens of thousands of Californians, including service members, and prevents JPMorgan Chase from continuing these deceptive and illegal debt collection practices," Attorney General Kamala Harris said in a statement.
The settlement comes as part of the federal and state regulators actions undertaken to curb improper credit card and debt collection practices and protect interests of the customers. The regulators’ vigilance has resulted in the settlement of several ongoing probes and litigations.
Currently, JPMorgan carries a Zacks Rank #3 (Hold). Some better-ranked banks include Northrim Bancorp Inc. NRIM, Pacific Continental Corp. PCBK and BofI Holding, Inc. BOFI. All these stocks hold a Zacks Rank #2 (Buy).
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