When opening a checking account, a bank will review a customer’s past banking history supplied from their previous financial institution. JPMorgan Chase allegedly failed to ensure this information was accurate and often left customers in the dark about why their applications were denied or who to contact to dispute these findings. For this, the company will pay a $4.6 million fine.
The Consumer Financial Protection Bureau announced today that an investigation found Chase violated the Fair Credit Reporting Act by failing to have adequate policies in place regarding the accuracy of information it reported about consumers’ checking account behavior.
The Ohio-based banking giant furnishes information about its checking accounts to nationwide specialty consumer reporting companies. This information is then used by other banks to screen potential customers based on their prior checking account behavior, including whether an account was closed due to an unpaid negative balance or due to suspected fraudulent activity.
Because Chase allegedly didn’t have proper processes in place to ensure this information was correct, it’s possible that consumers were wrongly denied the ability to open accounts. Additionally, if applicants did not receive the proper information on who furnished the data or why their applications were denied, they were unable remedy the situation.
Not Following The Rules
According to the complaint, Chase failed to establish and implement reasonable policies and procedures for reporting information about consumers’ deposit accounts.
Without adequate policies and procedures, the CFPB claims, there is a risk that a financial institution may report inaccurate information about consumers’ checking account history.
When a customer feels that reported information is inaccurate they can dispute the report with the company who supplied it. These companies, which would include Chase, are required to provide consumers with the results of the investigation into the disputes.
In Chase’s case, the CFPB alleges that from July 2010 to Dec. 2014, the company failed to provide this service to thousands of customers.
Additionally, the CFPB claims that between Oct. 2014 and Feb. 2015 Chase sent denial notices to about 17,500 checking account applicants.
These notices, however, allegedly failed to include the name and contact information of the nationwide specialty consumer reporting company that supplied the information upon which Chase’s denial was based, a requirement when sending such denial notifications.
Fixing The Issues
Under the CFPB’s consent order [PDF] resolving the issues, Chase must pay a $4.6 million penalty to the Bureau’s Civil Penalty Fund.
The bank, which did not admit wrongdoing, must also implement reasonable policies and procedures regarding the accuracy of information on consumers’ checking account behavior, inform customers of dispute outcomes, and provide customers with the information of consumer reporting companies providing data used to screen checking account applicants.
“Since identifying the issues three years ago, we significantly improved our procedures for sharing information with agencies,” a rep for Chase told Consumerist.