Discover Bank raked over the coals, fined, for violations in student loan servicing and debt collection (CFPB press release issued 7-22-2015)

FOR IMMEDIATE RELEASE [from the CFPB]:

July 22, 2015

CONSUMER FINANCIAL PROTECTION BUREAU ORDERS DISCOVER BANK TO PAY $18.5 MILLION FOR ILLEGAL STUDENT LOAN SERVICING PRACTICES

Discover's Illegal Servicing Practices Affected Private Student Loan Borrowers Transferred from Citibank

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) took action against Discover Bank and its affiliates for illegal private student loan servicing practices. 

The CFPB found that Discover overstated the minimum amounts due on billing statements and denied consumers information they needed to obtain federal income tax benefits. The company also engaged in illegal debt collection tactics, including calling consumers early in the morning and late at night. The CFPB’s order requires Discover to refund $16 million to consumers, pay a $2.5 million penalty, and improve its billing, student loan interest reporting, and collection practices. 

“Discover created student debt stress for borrowers by inflating their bills and misleading them about important benefits,” said CFPB Director Richard Cordray. “Illegal servicing and debt collection practices add insult to injury for borrowers struggling to pay back their loans. Today’s action is an important step in the Bureau’s work to clean up the student loan servicing market.” 

Discover Bank is an Illinois-based depository institution. Its student loan affiliates – The Student Loan Corporation and Discover Products, Inc. – are also charged in today’s action. Beginning in 2010, Discover expanded its private student loan portfolio by acquiring more than 800,000 accounts from Citibank. As a loan servicer, Discover is responsible for providing basic services to borrowers, including accurate periodic account statements, supplying year-end tax information, and contacting borrowers regarding overdue amounts. 

Student loans make up the nation’s second largest consumer debt market. The market has grown rapidly in the last decade. Today there are more than 40 million federal and private student loan borrowers and collectively these consumers owe more than $1.2 trillion. The market is now facing an increasing number of borrowers who are struggling to stay current on their loans. Earlier this year, the Bureau revealed that more than 8 million borrowers were in default on more than $110 billion in student loans, a problem that may be driven by breakdowns in student loan servicing. While private student loans are a small portion of the overall market, they are generally used by borrowers with high levels of debt who also have federal loans.  

Today’s action demonstrates how Discover failed at providing the most basic functions of adequate student loan servicing for a portion of the loans that were transferred from Citibank. Thousands of consumers encountered problems as soon as their loans became due and Discover gave them account statements that overstated their minimum payment. Discover denied consumers information that they would have needed to obtain tax benefits and called consumers’ mobile phones at inappropriate times to contact them about their debts. The CFPB concluded that the company and its affiliates violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair and deceptive acts and practices, and also the Fair Debt Collection Practices Act. Specifically, the CFPB found that the company: 

• Overstated the minimum amount due in billing statements: Discover overstated the minimum amount due for certain borrowers who were just starting to pay off their student loan debts. The minimum payment due incorrectly included interest on loans that were still in deferment and were not required to be paid. For some borrowers this overpayment meant diverting payments from other expenses; for others it meant not paying at all because they thought they could not come close to making the full payment and instead accrued associated penalties. 

• Misrepresented on its website the amount of student loan interest paid:The tax code permits taxpayers to deduct student loan interest paid during the year under certain conditions. Servicers are required to provide borrowers with a statement specifying how much the borrower paid in interest, if it was more than $600. Discover did not provide the Citibank private student loan borrowers with the customary tax information form it provided to its other borrowers, unless those borrowers submitted certain paperwork. For those borrowers who did not submit that additional form, their online interest statements on Discover’s website in 2011 and 2012 reflected $0.00 in interest paid. Discover did not explain that the borrowers were required to fill out a form to get the correct amount of interest they paid. This zero interest statement was likely to mislead consumers into believing that they did not qualify for the student loan tax deduction, potentially causing consumers to not seek important tax benefits. 

• Illegally called consumers early in the morning and late at night, often excessively: Discover placed more than 150,000 calls to student loan borrowers at inappropriate times – before 8 a.m. and after 9 p.m. in the borrower’s time zone. Discover learned about these violations in October 2012 but failed to address the problem until February 2013. 

• Engaged in illegal debt collection tactics: Discover acquired a portfolio of defaulted debt from Citibank but failed to comply with the consumer notices required by federal law. For example, the company failed to provide consumers with specific information about the amount and source of the debt and the consumer’s right to contest the debt’s validity. That information must be provided during the debt collector’s initial communication or in a written notice immediately following that initial communication. 

Enforcement Action

Under the Dodd-Frank Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Among the terms of the consent order filed today, Discover must: 

• Return $16 million to more than 100,000 borrowers: Specifically, Discover will: 
• Provide an account credit (or a check if the loans are no longer serviced by Discover) to the consumers who were misled about their minimum payments in an amount equal to the greater of $100 or 10 percent of the overpayment, up to $500. About 5,200 victims will get this credit;
• Reimburse up to $300 in tax preparation costs for consumers who amend their 2011 or 2012 tax returns to claim student loan interest deductions. For consumers who do not participate in this tax program or did not take advantage of earlier ones offered by the company, Discover will issue an account credit of $75 (or a check if their loans are no longer serviced by Discover) for each relevant tax year. About 130,000 victims will receive this relief; and
• Provide account credits of $92 to consumers subjected to more than five but fewer than 25 out-of-time collection calls and account credits of $142 to consumers subjected to more than 25 calls. About 5,000 victims will receive these credits.

• Accurately represent the minimum periodic payment: Discover cannot misrepresent to consumers the minimum periodic payment owed, the amount of interest paid, or any other factual material concerning the servicing of their loans. 

• Send clear and accurate student loan interest and tax information to borrowers: Discover must send borrowers the IRS W-9S form that it requires them to complete to receive a form 1098 from the company, and it must clearly explain its W-9S requirement to borrowers. Discover must also accurately state the amount of student loan interest borrowers paid during the year. 

• Cease making calls to consumers before 8 a.m. or after 9 p.m.: Discover must contact overdue borrowers at reasonable times. This will be determined by the time zone of the consumer’s known residence or phone number, unless the consumer has expressly authorized Discover to call outside these hours. 

• Pay $2.5 million civil penalty: Discover will pay $2.5 million to the CFPB’s Civil Penalty Fund. 

A copy of the consent order can be found at:http://files.consumerfinance.gov/f/201507_cfpb_consent-order-in-the-matter-of-discover-bank-student-loan-corporation.pdf  

This order comes as the Bureau considers steps to ensure that all student loan borrowers have access to adequate student loan servicing. Last year, the Bureau expanded its examination program to supervise the largest nonbank participants in the student loan servicing market. In October, the Bureau released an edition ofSupervisory Highlights identifying a range of illegal student loan servicing practices at one or more companies. Earlier this year, the Bureau was joined by leaders from the Department of Education and the Department of the Treasury in launching a public inquiry into student loan servicing practices.  

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov

Citibank to pay $35 million fine in enforcement action by CFPB over illegal credit card practices (7/21/2015 agency press release re-post)

FOR IMMEDIATE RELEASE: July 21, 2015 CONSUMER FINANCIAL PROTECTION BUREAU ORDERS CITIBANK TO PAY $700 MILLION IN CONSUMER RELIEF FOR ILLEGAL CREDIT CARD PRACTICES  Millions of Consumers Harmed by Bank's Deceptive Marketing and Unfair Billing of Credit Card Add-On Products and Services, and Other Unlawful Practices WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has ordered Citibank, N.A. and its subsidiaries to provide an estimated $700 million in relief to eligible consumers harmed by illegal practices related to credit card add-on products and services. Roughly 7 million consumer accounts were affected by Citibank’s deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products. A Citibank subsidiary also deceptively charged expedited payment fees to nearly 1.8 million consumer accounts during collection calls. Citibank and its subsidiaries will pay $35 million in civil money penalties to the CFPB.  “We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” said CFPB Director Richard Cordray. “In our four years, this is the tenth action we’ve taken against companies in this space for deceiving consumers. We will remain on the lookout for similar conduct and will address it as we find it.”  Citibank, N.A. is a national bank and insured depository institution. Citibank, as well as its subsidiaries Department Stores National Bank, and Citicorp Credit Services, Inc. (USA), marketed or offered credit card add-on products to consumers nationwide. From at least 2003 through 2012, Citibank actively marketed and enrolled consumers in five debt protection add-on products: “AccountCare,” “Balance Protector,” “Credit Protection,” “Credit Protector,” and “Payment Safeguard.” These products promised to cancel a consumer’s payment or balance, or defer the payment due date, if the consumer experienced certain hardships, such as job loss, disability, hospitalization, and certain life events, such as marriage or divorce. Citibank also marketed and sold other add-on products – “IdentityMonitor,” “DirectAlert,” “PrivacyGuard,” and “Citi Credit Monitoring Services” – that offered credit-monitoring or credit-report-retrieval services. Citibank also offered “Watch-Guard Preferred,” a wallet-protection service that notified credit and debit card issuers if the consumers reported a card lost or stolen.  Deceptive MarketingThe Bureau found that Citibank or its service providers marketed these products deceptively during telemarketing calls, online enrollment, “point-of-sale” application and enrollment at retailers, or when enrolled consumers later called to cancel certain products. For example, confusing text on pin-pad offer screens at the point of sale increased the likelihood that consumers applying for credit cards at a retailer would not realize they were both applying for credit and purchasing debt-protection coverage. These illegal practices affected an estimated 4.8 million consumer accounts. Among other things, Citibank’s misleading or illegal marketing or retention practices included:  Misrepresenting cost and fees for coverage: In some cases, telemarketers misrepresented or did not inform the consumer about the cost of the products. In certain telemarketing scripts, Citibank instructed telemarketers to claim a blanket “free” 30-day trial period, when Citibank still charged consumers during the initial 30 days of membership. In other instances, Citibank failed to inform consumers that they would be billed after the 30-day trial period if they did not cancel the product. Citibank also told some consumers they could avoid the fee by paying their balance in full by the due date. But to avoid the fee, consumers had to pay off the balance before the end of their billing cycle so that there would be no balance on the account when billing statements went out.  Misrepresenting benefits of some products: For consumers who signed up for a credit-monitoring product, Citibank claimed the fraud alert service on credit card accounts would alert them of fraudulent purchases. In fact, the credit-monitoring product only provided alerts to changes in a consumer’s credit file maintained by major reporting companies, not at the transaction level. Citibank also misled consumers in telemarketing calls and in online marketing about the credit score benefit. It told consumers the credit score was generated from all the three major credit reporting companies, when in reality the score was generated by a third-party vendor.  Illegal practices in the enrollment process: During telemarketing calls, Citibank’s nonbank subsidiary, Citicorp Credit Services, Inc. (USA), used illegal practices to enroll consumers in these products. That company used leading questions to obtain billing authorizations from consumers for certain add-on products. It also enrolled some consumers without any billing authorization or by construing ambiguous responses during calls for a billing authorization as permission for enrollment, and then charged consumers for the products.  Misrepresenting or omitting information about eligibility for coverage: In some instances, consumers disclosed information to Citibank indicating that they would be ineligible for certain benefits. However, Citibank failed to inform them that they would be ineligible to receive the product benefits and still enrolled them in the product.  Unfair Billing PracticesUnder federal law, in order for Citibank or its vendors to obtain consumers’ credit information to provide the credit-monitoring or credit-report-retrieval services for certain add-on products, consumers generally must authorize access to that information. In many instances, however, Citibank billed consumers for these products without having the authorization necessary to perform the credit-monitoring and credit-report-retrieval services. In other cases, Citibank or its vendors could not provide the promised services for other reasons, such as when the consumer’s information could not be found in the consumer reporting companies’ files. As a result, Citibank:  Charged consumers for benefits they did not receive: Citibank charged consumers whose authorizations were not in order or who could not receive the credit monitoring or other benefits. The company continued to charge consumers for services they were not receiving, in some cases for the entire time the consumer had the product.  Failed to provide product benefits: Consumers may have been under the impression that their credit was being monitored for fraud and identity theft, when, in fact, these services were either not being performed at all, or were only partially performed.  Citibank engaged in these unfair billing practices from at least 2000 through 2013. About 2.2 million consumer accounts were improperly billed product fees while not receiving the full product services.  Deceptive Collection PracticesWhen collecting payment on delinquent retailer-affiliated credit card accounts, Citibank offered consumers the option to pay by phone using a checking account, so the payment would post to the account on the same day. There was a $14.95 fee associated with using this option. Citibank misled consumers by not disclosing the purpose of the expedited payment fee. It misrepresented the payment fee as a “processing” fee and did not explain that the fee was to post payment to the account on the same day it was made rather than a fee to allow payment. Citibank also failed to disclose other no-cost payment alternatives. The company charged the fee even though it was rarely in the consumer’s interest to pay the fee so that the payment would post on the same day.  Enforcement ActionPursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices, or other violations of federal consumer financial law. This is the tenth action the Bureau has taken against companies for illegal practices in the marketing or administration of add-on products and services. The CFPB’s order requires that Citibank:  Provide $700 million in relief to roughly 8.8 million consumer accounts:Citibank must provide approximately $479 million in consumer relief to about 4.8 million consumer accounts as a result of the deceptive marketing or retention practices. It also must pay approximately $196 million to roughly 2.2 million consumer accounts that enrolled in the credit monitoring products and were charged while Citibank did not perform all of the promised services. Department Stores National Bank must provide about $23.8 million in consumer relief to almost 1.8 million consumer accounts for charging expedited payment fees on these delinquent accounts.  Conveniently repay consumers: Citibank will reimburse consumers affected by these practices. Consumers who are eligible for a refund do not have to take any action to get their refund. For the unfair billing practices related to the credit-monitoring products, Citibank has completed reimbursement to eligible consumers. For eligible consumers who have not received refunds yet, Citibank will initiate and complete a remediation process to reimburse those consumers.  End unfair billing practices: Consumers will no longer be billed for the credit monitoring products if they are not receiving the promised benefits.  Cease engaging in illegal practices: Citibank is prohibited from marketing all add-on products by telephone or at the point of sale, or engaging in attempts to retain consumers in these products by telephone, until it submits a compliance plan to the CFPB.  Pay a $35 million penalty: Citibank will make a $35 million penalty payment to the CFPB’s Civil Penalty Fund.  The CFPB is taking this action in coordination with the Office of the Comptroller of the Currency, which is separately ordering a $35 million civil penalty and restitution from Citibank and Department Stores National Bank for some of the same illegal practices.  The full text of the CFPB’s consent order is available at:http://files.consumerfinance.gov/f/201507_cfpb_consent-order-citibank-na-department-stores-national-bank-and-citicorp-credit-services-inc-usa.pdf  ###

CFPB Summary of robosigning and other debt-collection violations by Chase Bank USA NA and Chase Bank Services, Inc. and terms of consent order

JUL 8 2015

CFPB, 47 States and D.C. Take Action Against JPMorgan Chase for Selling Bad Credit Card Debt and Robo-Signing Court Documents 

Chase Ordered to Overhaul Debt Sales and Halt Collections on 528,000 Consumers’ Accounts

  

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau and Attorneys General in 47 states and the District of Columbia took action against JPMorgan Chase for selling bad credit card debt and illegally robo-signing court documents. The CFPB and states found that Chase sold “zombie debts” to third-party debt buyers, which include accounts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectible. The order requires Chase to document and confirm debts before selling them to debt buyers or filing collections lawsuits. Chase must also prohibit debt buyers from reselling debt and is barred from selling certain debts. Chase is ordered to permanently stop all attempts to collect, enforce in court, or sell more than 528,000 consumers’ accounts. Chase will pay at least $50 million in consumer refunds, $136 million in penalties and payments to the CFPB and states, and a $30 million penalty to the Office of the Comptroller of the Currency (OCC) in a related action.

“Chase sold bad credit card debt and robo-signed documents in violation of law,” said CFPB Director Richard Cordray. “Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices. We will continue to be vigilant in taking action against deceptive debt sales and collections practices that exploit consumers.”

Chase Bank, USA N.A. and its subsidiary Chase BankCard Services, Inc. are based in Newark, Del. and provide consumers with credit card accounts. From 2009 to 2013, when consumers defaulted on debts, Chase attempted to collect by contacting consumers, filing collections lawsuits, and selling accounts to third-party debt buyers. When Chase sold accounts, it provided debt buyers with an electronic sale file containing certain basic information about the debts from Chase’s internal databases, which the debt buyers used to collect on the debts. Chase was also responsible for preparing affidavits to verify debts when it or its debt buyers filed lawsuits to collect on defaulted credit card debts.

The CFPB found that Chase violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair, deceptive, or abusive acts and practices. Chase sold faulty and false debts to third-party collectors, including accounts with unlawfully obtained judgments, inaccurate balances, and paid-off balances. Chase also sold debts that were owed by deceased borrowers. Chase also filed misleading debt-collections lawsuits against consumers using robo-signed and illegally sworn statements to obtain false or inaccurate judgments for unverified debts. Specifically, the CFPB and states found that Chase:

• Sold bad debts to third-party debt buyers: Chase sold certain accounts that had already been settled by agreement, paid in full, discharged in bankruptcy, identified as fraudulent and not owed by the debtor, subject to an agreed-upon payment plan, no longer owned by Chase, or that were otherwise no longer enforceable. Chase also sold debts with missing or erroneous information such as whether the debt had been paid and the amount owed.

• Assisted third-party debt buyers in deceptively collecting debt: By selling inaccurate or uncollectable debts, Chase subjected certain consumers to debt collection by its debt buyers on accounts that were not theirs, in amounts that were incorrect or uncollectable. Chase knew, or should have known, that third-party debt buyers would seek to collect these faulty debts. Therefore, by providing inadequate or incorrect information, Chase assisted debt buyers in deceptive collection activities.

• Robo-signed affidavits to sue consumers for unverified debt: Chase filed more than 528,000 debt collections lawsuits against consumers and provided more than 150,000 sworn statements to debt buyers for their collections lawsuits against consumers, often using robo-signed documents. In doing so, Chase systematically failed to prepare, review, and execute truthful statements as required by law. Chase also made calculation errors when filing debt collection lawsuits that sometimes resulted in judgments against consumers for incorrect amounts. Chase failed to notify consumers and the courts once it learned of these problems.

CFPB Press Release (snip from agency's website) 

Enforcement Action

Pursuant to the Dodd-Frank Act, the CFPB has the authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws. Chase suspended collections litigation in 2011 and stopped selling debts in 2013. The CFPB and state actions provide relief for injured consumers, prohibit Chase from reviving its unlawful practices, and impose penalties for Chase’s law violations. Specifically, the order requires Chase to:

• Cease collecting on 528,000 accounts: Chase cannot collect, enforce in court, sell, or transfer debts for consumers whose Chase credit card accounts were sent to collections litigation between January 1, 2009 to June 30, 2014. If Chase previously obtained a court judgment requiring consumers to pay the debt, Chase will notify the consumer that they will not try to collect, enforce, or sell the judgment. Chase will also contact the three major credit reporting companies to request that the judgments not be reported against consumers. These accounts had an original face value estimated at several billion dollars when Chase sent them to collections litigation. The actual market value is now estimated in the tens or hundreds of millions of dollars. Debt relief of this kind permanently protects consumers from any further collections and judgments on these accounts.

• Pay at least $50 million in cash redress to consumers: Chase will pay cash refunds to consumers against whom collections litigation was pending between January 1, 2009 and June 30, 2014, for amounts paid above what the consumer owed when the debt was referred for litigation, plus 25 percent of the excess amount paid.

• Prohibit debt buyers from reselling accounts: Chase must require by contract or agreement that debt buyers cannot resell debts purchased from Chase, unless to sell back to Chase.

• Confirm debt before selling to debt buyers: Chase cannot sell debts that have been paid, settled, discharged, or are otherwise uncollectable. Prior to sale, Chase must provide account-level documentation to debt buyers confirming that the debts are accurate and enforceable. For a minimum of three years after selling the debt, Chase must make certain additional account information available to debt buyers including agreements, statements, and dispute records.

• Notify consumers that their debt has been sold and make their account information available to them: Chase must notify consumers when their account is sold and reveal who purchased the account, the amount owed at the time of sale, and that consumers can request further information about their accounts at no charge.

• Not sell zombie debts and other specified debts: Chase may not sell debts that do not have the required documentation, have been charged off for over three years or where the consumer has not paid for three years, are in litigation, are owed by a servicemember, are owed by someone who is deceased, or where the debtor has a payment plan.

• Withdraw, dismiss, or terminate collections litigation: Chase will withdraw, dismiss, or terminate all pre-judgment collections litigation pending at any time after January 1, 2009.

• Stop robo-signing affidavits: Declarations must be signed by hand, must reflect the actual date of signing, and must be based on the direct knowledge of the person signing and their review of Chase’s business records. Supporting documents submitted for debt collection litigation must be actual records of the debt, verified to be accurate, and not created solely for litigation.

• Verify debts when filing a lawsuit: When filing collections lawsuits, Chase is required to submit specific information associated with the debt including the name of the creditor at the time of the last payment, the date of the last extension of credit, the date of the last payment, the amount of debt owed, and a breakdown of any post-charge-off interest and fees.

• Pay $30 million civil penalty: Chase will pay a fine for its unlawful debt sales and robo-signing practices.

Chase must also implement policies, procedures, systems, and controls to ensure compliance with federal consumer financial laws when selling and collecting debts.

The Bureau is joined by 47 states and the District of Columbia in today’s action. The Bureau also worked in coordination with the OCC, which entered into a related agreement with Chase in 2013. The total relief to consumers includes debt relief associated with halting collections on more than 528,000 consumers’ accounts and at least $50 million in refunds. The amount of penalties and payments to states includes a $30 million civil penalty paid to the CFPB, a $30 million civil penalty paid to the OCC on the related matter, and $106 million in payments to states.

A copy of the consent order can be found at:http://www.consumerfinance.gov/f/201507_cfpb_consent-order-chase-bank-usa-na-and-chase-bankcard-services-inc.pdf

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Director of OCC on imposition of $30 mil fine on Chase Bank for robosigning and other shady debt collection practices

Text of Comptroller's Statement below. Click to read original on OCC's website here. 

Statement of Thomas J. Curry

Comptroller of the Currency

On Civil Money Penalties Assessed Against

JPMorgan Chase Bank

July 8, 2015

The civil money penalty we are assessing today follows an enforcement action that we
took against JPMorgan Chase Bank N.A. and two of its affiliates in 2013. That action
focused on non-mortgage debt collection practices and Servicemember Civil Relief Act
compliance. At that time, we required corrective action to address the deficiencies plus
restitution for customers harmed by improper practices. To date, more than $50 million in
restitution has been paid by the bank to affected customers.

Compliance with the Servicemembers Civil Relief Act, or SCRA, is a matter of great
concern to me and to the OCC. The men and women who serve in the uniformed military
not only put themselves at risk, but they give up the comforts of home and family, and
they sacrifice financially. Congress took note of their financial sacrifice in passing the
SCRA, and we recognized it in changes we made to our examination procedures in 2013.
At that time, we mandated that SCRA compliance be evaluated as part of every exam at
every institution we supervise. Each of those examinations must include a review of the
process the bank uses to comply with rate reduction requests from individuals who go on
active duty, as well as an evaluation of the bank’s foreclosure practices with respect to
servicemembers. Although these steps are not required by law, we felt they were
necessary to ensure that the men and women who serve our country receive the legal
protections they are entitled to.

With respect to debt collection, it was dismaying to find that documents being used in
litigation were being rushed through in a process that has come to be known as “robosigning.”
Our action in 2013 was aimed at ensuring that affidavits and other sworn
documents are accurate, based on the knowledge of the person signing the document, and
properly notarized.

Today, after having taken time to assess the full extent of the deficiencies, we are joining
with the CFPB and the states in assessing monetary penalties. These come on top of the
restitution required by our previous order, and they will help ensure that banks treat all
customers, including member of the armed services, fairly.

CONSENT ORDER FOR A CIVIL MONEY PENALTY

[To view the original pdf document click --> here]

The Comptroller of the Currency of the United States of America (“Comptroller”),
through his national bank examiners and other staff of the Office of the Comptroller of the
Currency (“OCC”), has conducted an examination of JPMorgan Chase Bank, N.A., Columbus,
Ohio, JPMorgan Bank and Trust Company, N.A., San Francisco, California, and Chase Bank
USA, N.A., Wilmington, Delaware (collectively referred to as “Bank”). The OCC has identified
unsafe or unsound practices in connection with (i) the Bank’s sworn document and collections
litigation practices and (ii) the Bank’s efforts to comply with the Servicemembers Civil Relief
Act (“SCRA”). The OCC has informed the Bank of the findings resulting from the examination.
These unsafe or unsound practices were addressed by a Consent Cease and Desist Order issued
by the OCC against the Bank on September 18, 2013. The 2013 Consent Cease and Desist
Order, in part, required the Bank to undertake remedial and corrective actions, including
restitution, with respect to its sworn document, collections litigation, and SCRA compliance
practices.

The Bank, by and through its duly elected and acting Boards of Directors (collectively
referred to as “Board”), has executed a Stipulation and Consent to the Issuance of an Order for a
Civil Money Penalty, dated July 8, 2015, that is accepted by the Comptroller (“Stipulation”). By
this Stipulation, which is incorporated herein by reference, the Bank has consented to the
issuance of this Consent Order for a Civil Money Penalty (“Order”) by the Comptroller. The
Bank has begun corrective action, and is committed to taking all necessary and appropriate steps
to remedy the deficiencies and unsafe or unsound practices identified by the OCC, and to
enhance the Bank’s sworn document, collections litigation, and SCRA compliance practices.

ARTICLE I
COMPTROLLER’S FINDINGS

The Comptroller finds, and the Bank neither admits nor denies, the following:

(1) For purposes of this Order, the following definitions shall apply:
(a) “Accounts” refers to accounts for an extension of credit in all lines of
business, except home lending, regardless of whether they are in
Collections Litigation.
(b) “Collections Litigation” refers to attempts by the Bank (or a third party
acting on its behalf), through legal proceedings in the United States, to (i)
collect, or establish liability for, debts or liabilities in connection with
Accounts in all lines of business, except home lending, or (ii) establish the
Bank’s right, title, and interest in and to collateral and/or realize on and
liquidate collateral in connection with such Accounts.

(2) The Comptroller incorporates this paragraph from Article I of the September 18,
2013 Consent Cease and Desist Order. In connection with the Bank’s sworn document and
Collections Litigation processes, and the Bank’s efforts to comply with the SCRA, the Bank:

(a) Filed or caused to be filed in courts affidavits executed by its employees
or employees of third-party service providers making various assertions in
which the affiant represented that the assertions in the affidavit were made
based on personal knowledge or based on a review by the affiant of the
relevant books and records, when, in many cases, they were not based on
such personal knowledge or review of the relevant books and records;
(b) In some instances, filed or caused to be filed in courts inaccurate sworn
documents that resulted in obtaining judgments with financial errors in
favor of the Bank;
(c) Filed or caused to be filed in courts numerous affidavits that were not
properly notarized, including those not signed or affirmed in the presence
of a notary, where required;
(d) Failed to have in place effective policies and procedures across the Bank
to ensure compliance with the SCRA;
(e) Failed to devote sufficient financial, staffing and managerial resources to
ensure proper administration of its sworn document and Collections
Litigation processes;
(f) Failed to devote to its sworn document and Collections Litigation
processes adequate internal controls, policies, and procedures, compliance
risk management, internal audit, third party management, and training; and
(g) Failed to sufficiently oversee outside counsel and other third-party
providers handling sworn document and Collections Litigation services.

(3) The unsafe or unsound practices identified by the OCC were most prevalent in the
Bank’s consumer and community banking lines of business, including credit card services, auto
lending, and student lending.

(4) By reason of the conduct set forth above, the Bank recklessly engaged in unsafe
or unsound banking practices, which were part of a pattern of misconduct.

ARTICLE II
ORDER FOR A CIVIL MONEY PENALTY

Pursuant to the authority vested in him by the Federal Deposit Insurance Act, 12 U.S.C.
§ 1818(i), the Comptroller orders, and the Bank consents to the following:

(1) The Bank shall jointly and severally make payment of a civil money penalty in
the total amount of thirty million dollars ($30,000,000), which shall be paid upon the execution
of this Order:
(a) If a check is the selected method of payment, the check shall be made
payable to the Treasurer of the United States and shall be delivered to:
Comptroller of the Currency, P.O. Box 979012, St. Louis, Missouri
63197-9000.
(b) If a wire transfer is the selected method of payment, it shall be sent in
accordance with instructions provided by the Comptroller.
(c) The docket number of this case (AA-EC-2014-64) shall be entered on the
payment document or wire confirmation and a photocopy of the payment
document or confirmation of the wire transfer shall be sent immediately,
by overnight delivery, to the Director of Enforcement and Compliance,
Office of the Comptroller of the Currency, 400 7th Street, S.W.,
Washington, D.C. 20219.

(2) This Order shall be enforceable to the same extent and in the same manner as an
effective and outstanding order that has been issued and has become final pursuant to 12 U.S.C.
§ 1818(h) and (i).

ARTICLE III
OTHER PROVISIONS

(1) This Order is intended to be, and shall be construed to be, a final order issued
pursuant to 12 U.S.C. § 1818(i)(2), and expressly does not form, and may not be construed to
form, a contract binding on the Comptroller or the United States.

(2) This Order constitutes a settlement of the civil money penalty proceeding against
the Bank contemplated by the Comptroller, based on the unsafe or unsound practices described
in the Comptroller’s Findings set forth in Article I of this Order. The Comptroller releases and
discharges the Bank and its subsidiaries from all potential liability for a civil money penalty that
has been or might have been asserted by the Comptroller based on the practices described in the
Comptroller’s Findings set forth in Article I of this Order, to the extent known to the Comptroller
as of the effective date of this Order. Provided, however, that (i) except as otherwise specified in
this paragraph, nothing in the Stipulation or this Order shall prevent the Comptroller from
instituting other enforcement actions against the Bank and its subsidiaries or any of its
institution-affiliated parties based on the findings set forth in this Order, or any other findings,
(ii) the practices described in Article I of this Order may be utilized by the Comptroller in other
future enforcement actions against the Bank or its institution-affiliated parties to establish a
pattern or the continuation of a pattern, and (iii) nothing in the Stipulation or this Order shall
preclude or affect any right of the Comptroller to determine and ensure compliance with the
terms and provisions of the Stipulation or this Order.

(3) The terms of this Order, including this paragraph, are not subject to amendment or
modification by any extraneous expression, prior agreements, or prior arrangements between the
parties, whether oral or written.

IT IS SO ORDERED, this 8th day of July 2015.

___/s/________________________________
Maryann H. Kennedy
Deputy Comptroller
Large Bank Supervision

UNITED STATES OF AMERICA
DEPARTMENT OF THE TREASURY
COMPTROLLER OF THE CURRENCY

OCC PRESS RELEASE

ON REGULATORY ACTION AGAINST CHASE BANK

AND 30 MILLION DOLLAR FINE  

NR 2015-98

FOR IMMEDIATE RELEASE
July 8, 2015

Contact: Robert M. Garsson
(202) 649-6870

OCC Fines JPMorgan Chase $30 Million for Deficiencies in Debt Collection Practices and Servicemembers Civil Relief Act Compliance

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today assessed a $30 million civil money penalty against JPMorgan Chase Bank, N.A.; JPMorgan Bank and Trust Company, N.A.; and Chase Bank USA, N.A. for unsafe or unsound practices related to the non-home loan debt collection litigation practices and to the Servicemembers Civil Relief Act (SCRA) compliance practices.

The unsafe or unsound practices involved deficiencies in the bank’s practices and procedures related to the preparation and notarization of affidavits and other sworn documents used in the bank’s debt collection litigation and deficiencies in its SCRA compliance program.

The penalty, paid to the U.S. Treasury, follows the enforcement action issued by the OCC on September 18, 2013. That order required the bank to provide remediation to affected consumers and to correct deficiencies in the bank’s practices and procedures.

As of June 2015, consumers have received more than $50 million as a result of the OCC’s 2013 orders. Bank management continues to identify impacted consumers and servicemembers as required under the OCC Consent Order, and will pay additional restitution to affected consumers as necessary.

OCC national bank examiners continue to monitor the bank’s compliance with the order.

The Consumer Financial Protection Bureau (CFPB) along with 47 states and the District of Columbia, are taking separate actions, which were also announced today.

Related Links

• Consent Order for the Assessment of a Civil Money Penalty (PDF)
• Statement of Comptroller of the Currency Thomas J. Curry (PDF)