Attorney General Kamala D. Harris announced a stipulated judgment resolving allegations that JP Morgan Chase committed credit card debt-collection abuses against tens of thousands of Californians on Monday.

The settlement specifically addresses debt collection wrongdoing that includes collecting incorrect amounts, selling bad credit card debt, and running a debt collection mill that involved illegally “robo-signing” thousands of court documents and improperly obtaining default judgments against military servicemembers.

As part of the settlement, Chase will pay $50 million in restitution to consumers nationwide, including an estimated $10 million to California consumers, and significant restitution to service members in California, some of whom were on active duty when Chase obtained illegal default judgments against them.

Chase will also pay $50 million in penalties and other payments to California, through the Office of the Attorney General. The judgment includes injunctive terms that fundamentally change Chase’s credit card debt-collection practices to prevent similar misconduct in the future, and is subject to court approval.

“Abusive and illegal debt collection practices will not be tolerated in California,” Attorney General Harris said. “This settlement provides real relief to tens of thousands of Californians, including service members, and prevents JP Morgan Chase from continuing these deceptive and illegal debt collection practices.”

Between 2009 and 2013, Chase filed more than 125,000 credit card collection lawsuits against California consumers relying on illegally robo-signed sworn documents and provided an additional 30,000 robo-signed sworn statements in support of lawsuits filed against California consumers by third-party debt-collectors.

Chase also made systematic calculation errors regarding the amounts owed, and sold “zombie debts” to third-party debt-collectors that included accounts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectable.

The Attorney General’s investigation and litigation further revealed that Chase sent letters to consumers that contained illegal threats and were signed by attorneys who did not review the accuracy of the information, determine if litigation was appropriate, or intend to follow through on some of the threats made, in violation of California’s Rosenthal Fair Debt Collection Practices Act.

Chase also filed false declarations regarding military service and improperly obtained default judgments against service members on active duty, in violation of the service members Civil Relief Act and the California Military and Veterans Code.

The judgment requires Chase to document and confirm debts before filing credit card collections lawsuits or selling credit card debts to debt-collectors. Chase is barred from robo-signing court and other documents, and also must prohibit debt buyers from reselling the credit card debts owed to Chase. Chase is also barred from selling certain debts, and is required to permanently stop all attempts to collect, enforce in court, or sell more than 528,000 consumer accounts valued at hundreds of millions of dollars.

This stipulated judgment resolves litigation filed by the Attorney General against Chase on May 9, 2013. Chase separately agreed to pay additional penalties and other payments to the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and other states in related actions.

Copies of the complaint and stipulated judgment are attached to the online version of this release at www.oag.ca.gov/news.