Chase Debt Collection Enforcement Action: Breaking Down the Numbers, And Regulator Commentary

During yesterday’s press call regarding the JP Morgan Chase Enforcement Action, officials from the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC), and the Attorneys General from Iowa and Illinois offered personal commentary on the Action, reinforced its implications, and worked to clarify questions about the numbers.

Iowa AG Tom Miller opened his remarks by expressing the strong sentiment that the Action will help a lot of people, and he spent several minutes stressing how bi-partisan the effort was – “even the 3 states who haven’t joined are bi-partisan.” He specifically recognized the Republican AG offices of Ohio and Florida as having been instrumental.

In response to a reporter’s question, he also commented that they believe this situation to not be unique to Chase, and they will be pursuing others who have similar practices.

Illinois AG Lisa Madigan added, “While this Order [regarding go-forward practices] applies only to Chase, it can and should be used as a template to refine practices across the entire industry.”

Many of the questions asked following the prepared remarks related to clarifying exactly how much money will be paid to whom, and when. There was confusion over whether the $50 million in restitution has or has not already been paid, and whether this was a new bucket of money, or whether it’s the same $50 million that was set aside to pay restitution in a 2013 OCC Order.

Indeed, the $50 million in restitution was related to this prior Order. According to one of the regulators $31 million had already been paid, and If Chases’ consumer restitution through the OCC action falls short of $50 million by July 1, 2016, Chase must pay the remaining balance to state attorneys general and the CFPB.

Fines/penalties paid under the prior 2013 OCC Order

• $30M as a civil penalty to the OCC
• $50M in restitution to consumers

Fines/penalties to be paid under the current Enforcement Action

• $30M as a civil penalty to the CFPB
• $95M to the states*
• $11M in attorney fees**
• $136M total

*Allocation of payment to states

**Chase shall pay to the Investigating Attorneys General a total of Eleven Million Dollars ($11,000,000), to be used for future expenditures relating to the investigation and prosecution of cases involving fraud, unfair and deceptive acts and practices, and other illegal conduct related to financial services or state consumer protection laws to the extent practicable, or as otherwise allowed by state law.

The $11 million shall be distributed as follows: $1 million to the Iowa Attorney General’s Office; $750,000 to each of the following Attorneys General Offices: Colorado, Connecticut, Florida, Hawaii, Illinois, Indiana, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, and Washington; and $250,000 to the Ameriquest Financial Services Fund.