Debt collection reform may have local impact

FRANKFORT – A settlement with Chase Bank and Chase Bankcard Services Inc. was reached earlier this week that ensures they will reform their credit card debt collection practices, according to an announcement from Kentucky Attorney General Jack Conway.

The $136 million joint state-federal settlement was reached with Conway, attorneys general in 47 other states, as well as the District of Columbia, and the Consumer Financial Protection Bureau (CFPB).

The joint state-federal agreement follows an investigation into Chase’s past debt collection practices.

“Chase’s consumer credit card debt collection practices harmed consumers here in Kentucky and across the country,” Conway said Tuesday. “In many cases, Chase stacked the deck against consumers by pursuing or unleashing collections cases based on information that was just plain wrong or even false. These include instances where the listed debt was the wrong amount, was tied to the wrong person, was discharged, time barred or very old –what’s often called ‘zombie debt.’ It’s an affront to consumers, courts, our laws and fairness.”

Part of the settlement agreement requires reforms in debt collection.

The agreement requires Chase to significantly reform its credit card debt collection practices in areas of declarations, collections litigation, debt sales and debt buying. Debt buying involves the sale of debt by creditors or other debt owners, often for pennies on the dollar, to buyers who then attempt to collect the debt at full value or sell it to other buyers.

The settlement is the end result of a lengthy investigation that Conway says uncovered “unlawful debt collection practices.”

Among the practices uncovered in the investigation were that they subjected consumers to collections activity for accounts that were not theirs, in amounts that were incorrect or uncollectable, that they made inaccurate credit reports and unlawful judgments that may affect consumers’ ability to obtain credit, employment, housing and insurance in the future, and made calculation errors when filing debt collection lawsuits that sometimes resulted in judgments against consumers for incorrect amounts.

Chase has now stopped collection on some 528,000 customers nationwide, including 3,740 individuals living in Kentucky.

Calls to Conway’s office inquiring the number of Floyd County residents possibly affected were not returned as of presstime.

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