Yesterday, the Consumer Financial Protection Bureau and legal officials from 47 states and Washington, D.C. announced a joint settlement with JPMorgan Chase that will result in the bank paying $136 million in fines and $50 million in restitution based on investigations into its debt collection and debt sales practices. The investigations focused on the selling of "zombie debts" and incorrect consumer data to third-party debt collectors and the use of improper debt collection techniques, including "robo-signing", the rapid signing of legal documents without adequate review.

Lisa Stifler, Policy Counsel at the Center for Responsible Lending (CRL), gave the following statement in reaction to the settlement:

Debt collectors and debt buyers have a documented history of collecting from or suing the wrong person for the wrong amount, or for debts not even owed. Banks that sell these 'zombie debts' enable this abusive behavior.

This settlement confirms that banks can no longer wipe their hands clean of the debts they sell and must confirm the debts are accurate and collectable before selling them to debt buyers. Consumers deserve to be protected from wrongful legal action, and taxpayers should not have to foot the bill for frivolous lawsuits that clog state courts.

Reasonable reforms, such as those included in this settlement, will help ensure that?debt collectors can show a consumer owes a debt before initiating a collection action. There is every reason to act—abusive debt collection remains the number one consumer complaint reported to the Consumer Financial Protection Bureau.

CRL has conducted extensive research into debt collection and debt buying. A common tactic used by debt buyers is to sue consumers, without determining if the consumer owes a debt, or if the debt is for the correct amount, in hopes of securing a quick court judgement against the consumer. A court judgement allows the debt buyer to then garnish the consumer's wages or place a lien on their property.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Andrew High at Andrew.High@responsiblelending.org or 919-313-8533.