The Consumer Financial Protection Bureau (CFPB) took action against JPMorgan Chase Bank, N.A. for failures related to information it provides for checking account screening reports.
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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.
The Bureau is ordering Chase to pay a $4.6 million penalty and implement necessary changes to its policies to prevent future legal violations.
“Information about checking account behavior is used to determine who can open a bank account,†said CFPB Director Richard Cordray.
“Because Chase did not have the required processes to report this information accurately, and kept consumers in the dark about reporting disputes and application denials, the Consumer Bureau is imposing a $4.6 million penalty and other measures to stop these violations in the future.â€
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 found that Chase broke the law 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 also 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 Chase’s denial of their checking account application.
Chase must implement reasonable policies and procedures regarding the accuracy of information on consumers’ checking account behavior that it sends to consumer reporting companies.
Chase must report the results of its investigations to consumers who filed disputes with the bank regarding the information reported about them to consumer reporting companies.
Chase must 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.
Chase must pay a $4.6 million penalty to the Bureau’s Civil Penalty Fund. ■