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JPMorgan to pay over US$125m to settle US credit card debt probes
[NEW YORK] JPMorgan Chase & Co has agreed to pay at least US$125 million to settle probes by US state and federal authorities that the bank sought to improperly collect and sell consumer credit card debt, according to people familiar with the matter.
The settlement also includes about US$50 million in restitution, the sources said.
The nation's largest bank has been accused of relying on robo-signing and other discredited methods of going after consumers for debts they may not have owed and for providing inaccurate information to debt buyers. Robo-signing refers to signing documents in mass quantities without reviewing records.
The US Consumer Financial Protection Bureau (CFPB), 47 states and the District of Columbia are expected to announce the settlements as soon as Wednesday, the people said.
The states will split some US$95 million, while the CFPB will get US$30 million, the people said.
JPMorgan Chase and the CFPB did not return calls for comment.
A spokesman for Iowa Attorney General Tom Miller, who has been leading a group of states in probing JPMorgan's debt sales and collection actions, declined to comment.
Mississippi and California are not expected to settle at the same time, sources said. Both have lawsuits pending against JPMorgan over debt collection practices.
California Attorney General Kamala Harris sued in 2013, claiming the bank engaged in fraudulent and unlawful debt collection practices against 100,000 California credit card borrowers over some three years.
The state claims the bank flooded state courts with questionable lawsuits, filing thousands every month, including 469 such lawsuits in one day alone.
Kristin Ford, a spokeswoman for the California attorney general, did not return calls for comment.
Mississippi Attorney General Jim Hood's lawsuit filed a similar lawsuit against JPMorgan in 2013.
The Mississippi lawsuit said employees described a "chaotic"and "disorganized" workplace marred by "rampant" mistakes, inadequate training, constantly changing policies, high turnover and unrealistic quotas.
Rachael Ring, a spokeswoman for the Mississippi attorney general, would only say the lawsuit is pending.
In September 2013, the US Consumer Financial Protection Bureau ordered JPMorgan to refund US$309 million to about 2 million customers for illegal credit card practices, including charging consumers for credit card monitoring services they did not receive.
The Office of the Comptroller of the Currency that month also issued a consent order against JPMorgan after identifying unsound practices in connection with the bank's sworn document and collections litigation. The order demanded changes, including to debt sales.
At the time, JPMorgan said collection issues affected less than 1 per cent of customers and that it stopped filing collection lawsuits in 2011 and stopped enrolling customers in credit monitoring services in 2012.
In 2012, Iowa's Attorney General Miller helped negotiate a US$26 billion settlement with the nation's largest banks over mortgage abuses, which also included robo-signing.