JPMorgan Chase & Co. (JPM:US), the biggest U.S. bank by assets, is paying $389 million in penalties and restitution to settle regulators’ claims that it unfairly charged customers for credit-monitoring products.
The New York-based bank will pay $60 million to the Office of the Comptroller of the Currency and $20 million to the Consumer Financial Protection Bureau in penalties for improperly billing customers for the “add-on products,” the agencies said in a statement today. JPMorgan has already paid $309 million in refunds to more than 2.1 million customers, CFPB Director Richard Cordray said in a statement.
“Put simply, Chase was charging consumers for services they did not receive,” Cordray said.
An investigation started by the OCC revealed that JPMorgan enrolled customers in credit-monitoring programs that were sold as add-ons to credit cards from October 2005 through June 2012, the consumer bureau said. The bank began charging customers for the programs before obtaining the necessary written authorization, the regulators said.
The consumer bureau, created by the Dodd-Frank Act of 2010, is conducting an industrywide inquiry into various aspects of the add-on market, including whether credit-card customers were unknowingly enrolled in products such as credit-monitoring services and whether banks properly oversaw contractors that helped sell them. The probe has yielded settlements with companies including Capital One Financial Corp. (COF:US), which agreed to pay $210 million in July 2012.
Bill Wallace, the bank’s head of operations for consumer and community banking, said in an e-mailed statement that the company’s Chase Bank unit had stopped new enrollments in the products in mid-2012.
“Any mistakes like these are regrettable and we are committed to ensuring our partners and vendors hold themselves to the same high standards that our customers expect of us,” Wallace said in the statement.
The bank still faces a CFPB investigation, disclosed last month in a regulatory filing, over credit card debt sales.
Earlier today, the OCC was involved in two other settlements with JPMorgan. It was among several regulators in the $920 million agreement to settle allegations stemming from the bank’s London Whale losses. The OCC also ordered the bank repay harmed customers and fix problems with its consumer debt-collections practices.
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