JPMorgan told to fix credit card practices, pay refunds

WASHINGTON Thu Sep 19, 2013 3:03pm EDT

A man talks on his phone while pacing inside of the headquarters of JPMorgan Chase & Co bank in New York, March 15, 2013. REUTERS/Lucas Jackson

A man talks on his phone while pacing inside of the headquarters of JPMorgan Chase & Co bank in New York, March 15, 2013.

Credit: Reuters/Lucas Jackson

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WASHINGTON (Reuters) - U.S. bank regulators on Thursday ordered JPMorgan Chase & Co to correct its debt collection and other credit card procedures and to refund more than $300 million to customers harmed by the bank's practices.

In separate orders, regulators faulted the largest U.S. bank by assets for errors in how it pursued credit-card debts in court, and for charging customers for credit-monitoring services they never received.

The orders, which include $80 million in penalties against JPMorgan, came the same day the bank agreed to pay $920 million in penalties to resolve the biggest civil probes of its "London Whale" derivatives trading losses.

While the settlements do not end the various investigations of the bank, they allow JPMorgan Chief Executive Jamie Dimon to resolve some of the multitude of legal issues weighing on his company.

The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency ordered the bank to refund $309 million to about 2 million customers charged for the credit-monitoring services.

The OCC also ordered the bank to review past debt collections and compensate customers affected by errors. It did not provide details of how extensive the debt-collection problems were. That order did not include financial penalties, but left the door open to future fines.

In a statement, JPMorgan said the collection issues affected less than 1 percent of customers. It also said it stopped filing collection lawsuits in 2011 and has not restarted them.

In a separate statement, the bank said it stopped enrolling customers in credit-monitoring products in mid-2012, had refunded affected customers, and will discontinue the products by the end of 2013.

"Any mistakes like these are regrettable and we are committed to ensuring our partners and vendors hold themselves to the same high standards that our customers expect of us," Bill Wallace, who heads JPMorgan operations for consumer and community banking, said.

Through the OCC's debt collection order, the bank is required to review all related litigation, excluding home loans, dating back to January 2009. A spokesman for the agency said the affected borrowers number in the "hundreds of thousands."

The OCC also faulted the bank for its compliance with the Servicemembers Civil Relief Act, and ordered it to improve its policies governing benefits for armed services members. That law allows members of the military to postpone or suspend financial obligations such as outstanding credit card debt payments.

JPMorgan disclosed in August that it expected the actions from the OCC and the CFPB. It also said other regulators continued to investigate the debt-collection matter.

Iowa has been leading a group of 13 states investigating the bank. A spokesman for Iowa Attorney General Tom Miller said on Thursday the group was examining JPMorgan's debt-collection practices and was also looking at industry-wide issues.

Separately, in May, California's attorney general sued JPMorgan and accused it of filing faulty documents when seeking to collect on some credit card debt in the state.

(Reporting by Aruna Viswanatha; Editing by Karey Van Hall, Gerald E. McCormick and John Wallace)

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Comments (1)
puzzled wrote:
Great job Jamie – you are on a roll – Libor scandal next? Maybe your bonus will only be a paltry $15mm this year

Sep 19, 2013 12:54am EDT  --  Report as abuse
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