September 24, 2013
Massachusetts Probes J.P. Morgan's Debt-Collection Practices
The Massachusetts Attorney General's Office is investigating J.P. Morgan Chase JPM -1.03% & Co.'s debt-collection practices, a person familiar with the matter said, one of several probes the bank faces over how it has collected payments from delinquent borrowers.
The investigation by Massachusetts Attorney General Martha Coakley is separate from another investigation being conducted by a group of 13 states, this person said. That investigation, led by Iowa Attorney General Tom Miller, is focused on the debt-collection practices of J.P. Morgan and other companies.
It wasn't clear when Massachusetts began its investigation or whether it was at an earlier stage than other states. J.P. Morgan hasn't previously disclosed the investigation.
A spokesman for J.P. Morgan declined to comment.
The New York bank has faced a number of regulatory probes into its collections practices. On Thursday, the Office of the Comptroller of the Currencyannounced it had reached a settlement with the bank over an investigation of J.P. Morgan's use of sworn documents in lawsuits filed against borrowers to collect past-due debt.
The OCC said the bank and its outside lawyers allegedly filed inaccurate documents in court, didn't properly notarize documents and made statements about the accuracy of documents that hadn't been verified. The regulator ordered the bank to notify consumers in the future when their debt was being sold to a third party, to properly maintain account documents and to ensure employees and other staff involved in litigation had required information.
The OCC hasn't fined the bank in relation to the settlement.
J.P. Morgan said Thursday that it stopped filing credit-card collection lawsuits in 2011 and hadn't resumed filing such suits.
California filed a lawsuit in May accusing J.P. Morgan of "fraudulent" and "unlawful" methods in its pursuit of old debts from 100,000 borrowers in the state. The bank hasn't commented on that suit, which is pending.
The Consumer Financial Protection Bureau is also probing J.P. Morgan's collection and sale of credit-card debt, including its use of sworn legal documents, J.P. Morgan disclosed in an August regulatory filing, but hasn't reached a settlement with the bank.
The CFPB earlier this year said it would investigate alleged abuses in the debt-collection industry, including lenders and debt collectors allegedly misrepresenting the size of debts and failing to post payments made by borrowers.
J.P. Morgan on Thursday also agreed to pay $80 million in fines to CFPB and OCC over allegations related to products it sold to credit-card holders.
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