In coordination with the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau ordered Chase Bank USA, N.A. and JPMorgan Chase, N.A. to refund approximately $309 million to more than 2.1 million customers for what the CFPB termed illegal credit card practices. From October 2005 to June 2012, Chase marketed “add-on” products to its credit cards which were intended to monitor customer credit and alert customers to possible fraudulent activity. According to the September 19 press release, however, consumers were billed for these services before actually receiving them.
In a consent order issued September 18, the bureau says that billing for products started as soon as the customer enrolled, even when there was a delay in beginning the service. The written authorization necessary for third-party vendors to access customers’ credit information was sometimes late in arriving or never arrived at all; in other cases, the authorization arrived but was not processed. The bureau alleges that, while Chase and its third-party vendors were unable to provide full services because of these circumstances, Chase continued to charge monthly fees.
The CFPB ordered Chase to make a complete repayment to customers who enrolled in the product but did not receive services. Besides the original fees charged for services not rendered, Chase must refund interest as well as any over-the-limit fees resulting from the charge.
Chase also must submit to an independent audit to ensure compliance with the terms of the repayment, improve its oversight of any third-party vendors who manage identity protection products and pay a $20 million fine to the CFPB’s Civil Penalty Fund. In addition, the OCC is separately ordering restitution of $309 million and $60 million in civil money penalties.
In a press release, CFPB director Richard Cordray described the order as a continuation of the bureau’s work “to address problems in the credit card add-on product market.” Cordray said that the bureau would “continue to be vigilant in pursuit of those who deceive consumers or treat them unfairly.”