JP Morgan Chase’s annual 10-K report to the SEC reveals some critical details about the mega-bank’s debt collection practices. In 2013, JP Morgan Chase recovered $593 million of charged-off credit card debts, continuing a three-year trend of anemic debt recovery. In 2010, the country’s biggest bank recovered $1.37 billion from unpaid credit card bills it had previously written off.

According to the report, net charge-offs had been steadily decreasing since 2011. But from 2012 to 2013, net charge-offs plummeted from $9.3 billion to $5.8 billion. In that time, the bank’s net charge-off rate was almost cut in half, too; it went from 2.27 percent in 2012 to 1.48 percent in 2013.

But the slump is not entirely bad news for the bank. As the economy has improved, so has the quality of consumer credit. Since the official end of the recession, credit card losses have declined, and so have the bank’s efforts to collect them. Overall credit card losses at JP Morgan fell Chase 71 percent from 2010 to 2013, while the bank recorded $4.5 billion in gross card charge-offs.

Still, it’s hard to ignore how a tougher regulatory environment has cut into Chase’s ability to collect charged-off debt. In 2011, JP Morgan Chase stopped suing customers for unpaid credit card debt. And in 2013, the bank closed its legal collections unit and stopped selling charged-off debt to outside collectors.

In the report, Chase also points out how recent oversight of its debt collection practices may increase compliance costs. The report specifically points to the 2013 consent order Chase entered into with the Office of the Comptroller of the Currency. The consent order essentially creates a blueprint for dramatic oversight by banks over their collection agencies, lawyers and debt buyers.

“The Firm expects that such regulatory scrutiny will continue, and that regulators will continue to take formal enforcement action, rather than taking informal supervisory actions, more frequently than they have done historically,” Chase stated in the report.

Learn how the Chase consent order impacts creditors and collectors throughout the ARM industry with To the Point: The Chase Consent Order.

Chase’s reported difficulties with recovering charged-of debt may be indicative of a larger trend in the industry. For instance, a growing number of debt buyers who acquire charged-off debt are retroactively charging interest on the debt. This has sparked a few class action lawsuits in Illinois, Kentucky and Ohio, but none have received a court ruling. In fact, as it relates to FDCPA, there is no official regulation or court ruling stating that the practice is wrong.

Learn more about debt recovery post-charge-off and other pressing compliance issues with To the Point: Collection Call Compliance.

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