Federal regulators said Thursday that banking giant JPMorgan Chase must refund $309 million to 2.1 million credit card holders for alleged deception in credit card “add-on” services like credit monitoring and ID theft protection.
The firm was also ordered to pay $80 million in fines.
The “abusive practices” took place during a 7-year span from 2005 to 2012, according to the Consumer Financial Protection Bureau.
The order comes on a day JPMorgan Chase also agreed to pay a $920 million fine for “inadequate oversight” of its London trading operation.
The CFPB says the bank charged customers $8-$12 monthly for services before receiving required written authorization, and sometimes, consumers paid for nothing.
“In some cases, consumers paid for these services for several years without receiving all of the promised benefits,” the agency said in a statement. “Consumers were under the impression that their credit was being monitored for fraud and identity theft, when, in fact, these services were either not being performed at all, or were only partially performed.”
The fees caused some consumers to exceed their credit limits, triggering additional fees.
The CFPB ordered the bank to refund the customers for all costs associated with the alleged deceptive practices, including interest. Current customers will receive a credit on their account; those who are no longer customers will receive a check by Nov. 30.
“At the core of our mission is a duty to identify and root out unfair, deceptive, and abusive practices in financial markets that harm consumers,” said CFPB Director Richard Cordray. “This order takes action against such practices and requires Chase to fully refund more than $300 million to consumers who were charged illegal fees.”
In a statement, Chase said it had stopped enrollments in the products in question as of mid-2012 and plans to “fully exit them” by the end of this year.
“We have already credited or refunded the customers affected. 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,” said Bill Wallace, head of Operations for Consumer & Community Banking for Chase.
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