The Consumer Financial Protection Bureau (CFPB) has ordered Chase Bank USA, N.A. and JPMorgan Chase Bank, N.A. to refund an estimated $309 million to more than 2.1 million customers for illegal credit card practices.
This enforcement action is the result of work started by the Office of the Comptroller of the Currency (OCC), which the CFPB joined last year. The agencies found that Chase engaged in unfair billing practices for certain credit card "add-on products" by charging consumers for credit monitoring services that they did not receive.
According to the CFPB order, Chase enrolled consumers in credit card "add-on" products that promised to monitor customer credit and alert consumers to potentially fraudulent activity. In order for consumers to obtain credit monitoring services, consumers generally must provide written authorization. Chase, however, charged many consumers for these products without or before having the written authorization necessary to perform the monitoring services. Chase charged customers as soon as they enrolled in these products even if they were not actually receiving the services yet.
The agencies found that Chase engaged in these practices between October 2005, when Chase first offered the products, and June 2012, when Chase stopped billing consumers who were not receiving the promised benefits.
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Chase has taken steps to correct these unfair practices by ending the marketing of these services in April 2011 and issuing consumer refunds in October 2012.
This action is the third that the Bureau has taken in coordination with a fellow regulator to address illegal practices with respect to credit card add-on products. This action is being taken in coordination with a separate action of the OCC, which initiated the inquiry in 2011. The OCC is separately ordering restitution of approximately $309 million from Chase Bank USA, N.A. and JPMorgan Chase Bank, N.A. The OCC's order also includes a separate order for Chase to pay $60 million in civil money penalties in addition to those ordered by the CFPB.
The Bureau is releasing a Consumer Advisory to make Chase customers aware of this action. The advisory is available online.