Close

Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

CFPB slaps JPMorgan Chase over checking account screening

Joe Mont | August 9, 2017

The Consumer Financial Protection Bureau has announced a consent order with JPMorgan Chase Bank for alleged failures related to information it provides for checking account screening reports.

The Bureau is ordering Chase to pay a $4.6 million penalty and implement necessary changes to its policies to prevent future legal violations.



Banks screen potential customers based on reports about prior checking account behavior created by consumer reporting companies. Banks that supply information for those reports are legally required to have proper processes in place for reporting accurate information. “Chase did not have these processes in place and kept consumers in the dark about the results of their reporting disputes and key aspects of their checking account application denials,” a CFPB statement says.



Chase is a national bank based in Columbus, Ohio that provides numerous consumer financial products and services, including checking and savings accounts, money market accounts, mortgages, personal loans, credit cards, and auto loans. Chase furnishes information about its checking accounts to nationwide specialty consumer reporting companies. These companies which, include Chex Systems and Early Warning Systems, collect and report negative information about consumer checking accounts, such as whether an account was closed due to an unpaid negative balance or due to suspected fraudulent activity.

The Bureau alleges that Chase broke the law, in its opinion, by failing to comply with its obligations outlined in the Fair Credit Reporting Act by not having adequate policies in place regarding the accuracy of information it reported about consumers’ checking account behavior.



Chase allegedly failed to provide consumers who disputed their information with the results of its investigation, and failed to tell certain consumers which consumer reporting company supplied the information that resulted in the bank’s denial of their checking account application.

 

According to the CFPB’s consent order, Chase: failed to have adequate policies and procedures for accurately reporting checking account information; kept consumers in the dark about the results of their disputes; and \sent denial notices to approximately 17,500 checking account applicants, but failed to identify the name and contact information of the nationwide specialty consumer reporting company that supplied the information upon which the denial was based.

 

The $4.6 civil money penalty will be paid to the Bureau’s Civil Penalty Fund. Also, Chase was ordered by the CFPB, in the consent order, to implement “reasonable policies and procedures regarding the accuracy of information on consumers’ checking account behavior that it sends to consumer reporting companies.”



The bank must also report the results of its investigations to consumers who filed disputes with the bank regarding the information reported about them to consumer reporting companies. It must also provide consumers with the contact information of the consumer reporting company that supplied information that Chase used to deny an application for a deposit account.

Information provided by the CFPB on how to obtain reports from specialty consumer reporting companies can be found online.