Posted by Alyssa Cohen.
This year, JPMorgan Chase will settle the charges made against it for the use of illegal debt-collection practices made between 2009 and 2013. The lawsuit follows “a national settlement over similar allegations.” The nation’s largest bank miscalculated the amounts owed by customers, and sold debt to collectors that had been filed improperly against 125,000 Californians. It also obtained default judgment against active military personnel, which is against state and federal laws. While it is not illegal for a bank to attempt to collect overdue debt, the methods used by JPMorgan Chase were unethical and considered illegal by all states, as well as the federal government.
“In addition to other state penalties, Chase will pay $50 million in restitution to customers who were victims of its debt-collection practices.” It also agreed to conditions governing how they can collect or sell consumer debts to outside companies.
It just is not fair to customers who have not been able to notify the bank of their inability to pay. However, I believe that default judgment should be made against customers who were actively avoiding to pay back their debt. Dismissing the lawsuits that were filed improperly was a great sign of the progress that the bank has made to take responsibility for their wrongdoing, as well as not filing “any credit card debt suits against customers” since 2011.
Jumping ahead to filing lawsuits against a bank’s customers will no doubt hurt JPMorgan’s reputation. As with most lawsuits brought by the government, the majority of the fines collected went to the Consumer Financial Protection Bureau in order to help consumers take control of their own financial decisions. Protecting the consumer by educating and enforcing federal laws can make a great difference in the health of our economy.
Alyssa is an accounting major at the Feliciano School of Business, Montclair State University.