Settlement with Chase Regarding Unfair, Unlawful Credit Card Collections
AUSTIN, July 9, 2015 - Texas Attorney General Ken Paxton today announced that a state-federal settlement with Chase Bank, USA N.A. and Chase Bankcard Services, Inc., will result in the bank having to comply with significant reforms to its credit card debt collection, provide consumer restitution, prohibit active collection on approximately 528,000 consumer accounts, and suffer substantial penalties. Texas will receive approximately $4.3 million from the settlement’s total value of $136 million.
“Credit is an increasingly important element of anyone’s financial health, and Chase’s unfair consumer credit card debt collection practices harmed consumers in Texas and across the country,” Attorney General Paxton said. “In many cases, Chase stacked the deck against consumers by pursuing or unleashing collections cases where the listed debt was the wrong amount, tied to the wrong person or even discharged. This settlement requires new safeguards to protect Chase customers.”
The joint state-federal agreement, through an Assurance of Voluntary Compliance (AVC), with Texas, 47 other states, plus the District of Columbia, and the Consumer Financial Protection Bureau, follows a lengthy investigation into Chase’s past debt collection practices. Texans were found to have unnecessarily suffered financial hardships, such as improperly decreased credit ratings, loss of job opportunities or the ability to refinance their home.
Among other reforms, the agreement requires new safeguards to help ensure debt information is accurate and inaccurate data is corrected, provides additional information to consumers who owe debts, and bars Chase’s debt buyers from reselling consumer debts to other purchasers.
Chase has agreed to cease all collection efforts on more than 528,000 consumers, including an estimated 9,066 in Texas. 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.