The state of Hawaii will receive nearly $1 million following a joint federal-state settlement involving the way Chase Bank collected credit card debt.
Chase will pay $136 million to the 47 participating states and $30 million to the Consumer Financial Protection Bureau. Officials said Chase aggressively tried to collect debt from the wrong people, demanded excessive payments and pursued discharged, time-barred or very old debts.
The $920,000 payment to Hawaii will be used to fund or assist in funding consumer education, consumer outreach, consumer protection enforcement or consumer protection litigation, state officials said.
As part of the settlement, Chase has agreed to stop collection efforts on an estimated 500,000 accounts nationwide, including 530 in Hawaii, which it had sued for credit card debts. The company will notify affected borrowers of the change and will request all three major credit reporting agencies not to report judgments.
Chase will also pay $50 million in consumer restitution through a separate 2013 consent order reached with the Office of the Comptroller of the Currency. State officials said Chase had issued 30 checks, totaling $26,000, in restitution payments to Hawaii consumers.
According to the state-federal probe, Chase:
- Subjected consumers to collections activity for accounts that were not theirs, in amounts that were incorrect or uncollectable.
- Subjected consumers to inaccurate credit reporting and unlawful judgments that may affect consumers' ability to obtain credit, employment, housing and insurance in the future.
- Sold certain accounts to debt buyers that were inaccurate, settled, discharged in bankruptcy, not owed by the consumer, or otherwise uncollectable.
- Filed lawsuits and obtained judgments against consumers using false and deceptive affidavits and other documents that were prepared without following required procedures, a practice commonly referred to as "robo-signing." These practices misled consumers and courts and caused consumers to pay false or incorrect debt and incur legal expenses and court fees to defend against invalid or excessive claims.
- Made calculation errors when filing debt collection lawsuits that sometimes resulted in judgments against consumers for incorrect amounts.