JPMorgan Chase to Refund $309 Million for Illegal Credit Card Activity
The Consumer Financial Protection Bureau announced today that JPMorgan Chase must refund $309 million to credit card customers that were improperly billed for add-on products.
The CFPB and the Office of the Comptroller of the Currency concluded that 2.1 million cardholders were billed for services they never received. These add-on products included identity theft protection and fraud monitoring. Chase charged monthly fees ranging from $7.99 to $11.99. The investigation found that the company even charged customers for these services before the customers gave any authorization.
In addition to the $309 million in refunds to cardholders, JPMorgan Chase must also pay fines of $60 million to the Office of the Comptroller of the Currency as well as $20 million to the CFPB’s Civil Penalty Fund.
The illegal activity took place between October 2005 and June 2012.
“Chase Bank USA and JPMorgan Chase Bank engaged in unfair billing practices for certain credit monitoring products, which were often offered as ‘add-ons’ to credit card accounts,” said CFPB Director Richard Cordray in a statement. “Put simply, Chase was charging consumers for services that they did not receive.”
This is the fourth major action against credit card issuers for deceptive practices. Previously, the CFPB has levied significant fines against American Express, Discover and Capital One for either misleading consumers into applying for credit cards or buying add-on services. These actions by the CFPB put $425 million back into the hands of nearly six million credit card consumers. In addition to these refunds to consumers, the three issuers had to pay a total of $66.5 million in penalties.
A summary of those previous actions by the CFPB:
- Discover refunded $200 million to their credit card customers for pressuring cardholders into buying expensive payment protection and credit monitoring services. In addition, Discover paid a $14 million fine. The regulatory agencies reported the company’s telemarketers misled customers about the programs, enrolled customers without their consent and led customers to believe the products were free. In some instances, the scripts suggested the cardholders would not be charged until after they had reviewed written materials, but the materials arrived after Discover had already charged the customers for the products.
- Capital One agreed to pay up to $150 million to two million consumers as a result of the bank’s telemarketers deceptively pushing these same credit monitoring and payment protection services. Capital One paid fines of $60 million to the CFPB and the Office of the Comptroller of the Currency.
- American Express had to reimburse an estimated $85 million to nearly 250,000 cardholders who were either misled into paying an old debt because they thought it would be reported to the credit bureaus, promised up-front bonuses from signing up for credit cards, paid illegal late fees or were promised their debt would be forgiven and then denied new credit cards because the debt was not forgiven.
“We continue to be vigilant in pursuit of those who deceive consumers or treat them unfairly. Consumers deserve better, and we intend to help them achieve that,” said Cordray.