JPMorgan Chase is taking the necessary steps after its illegal methods of collecting debts from its card holders have been exposed. The nation's largest bank is now willing to pay $100 million just to settle the lawsuit that sprang from its controversial debt-collecting gesture.
According to Bakersfieldnow.com, JPMorgan is owning up to its mistake of illegally collecting debts from over 125,000 of its credit card holders. The state's attorney general announced the news Monday.
The $100 million will cover the following: $50 million is for the national agreement and the other $50 is for the penalties to the state to formally settle the 2013 lawsuit. Out of the national agreement sum, $10 million is reportedly going to California-based consumers.
JPMorgan Chase is known for being the largest bank in the U.S. in terms of assets, so it is expected to fix the issue right away.
The bank's spokesperson, Suzanne Alexander, said, "We are pleased to resolve these legacy issues with the California Attorney General and we are working to complete our remediation of affected card customers," as quoted by Business Standard.
The issue with the debt-collection scheme was the company collected incorrect amounts from credit card holders. JPMorgan also reportedly sold bad credit card debt and even ran a debt collection mill that used an illegal "robo-signing" system to thousands of court documents. The bank was also exposed for its illegal way of retrieving default judgments against military service members.
Thousands of debt collection lawsuits have since been filed from 2008 through 2011. And with this announcement, military members in California will get the proper reimbursement.
"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.
Additionally. though the settlement has yet to be approved by the court, JPMorgan Chase already agreed to following the list of conditions on how it should collect debt and even sell consumer debts to outside collection companies, the Los Angeles Times has learned.
"I think what you're seeing with these decisions is that banks had better get their act together. Rules are coming and that kind of behavior won't be tolerated. Business as usual in terms of debt collection has to stop," said National Assn. of Consumer Advocates executive director Ira Rheingold.
Finally, in light of the lawsuit, the company was obliged no to collect more than 528,000 customer accounts that are valued at hundreds of millions of dollars in total.
