Federal regulators said Thursday that banking giant JP Morgan Chase must refund $309 million to 2.1 million credit card holders for alleged deception in credit card “add-on” services like credit monitoring and ID theft protection. The “abusive practices” took place during a seven-year span from 2005 to 2012, according to the Consumer Financial Protection Bureau.
The order comes on a day JP Morgan chase also agreed to pay a $920 million fine for “inadequate oversight” of its London trading operation
The CFPB says the bank charged customers $8-$12 monthly for services before receiving required written authorization, and sometimes, consumers paid for nothing.
“In some cases, consumers paid for these services for several years without receiving all of the promised benefits,” the agency said in a statement. “Consumers were under the impression that their credit was being monitored for fraud and identity theft, when, in fact, these services were either not being performed at all, or were only partially performed.”
The fees caused some consumers to exceed their credit limits, causing additional fees.
The CFPB ordered the bank to refund the customers for all costs associated with the alleged deceptive practices, and will force the bank to pay consumers interest also. Current customers will receive a credit on their account; those who are no longer customers will receive a check by Nov. 30.
“At the core of our mission is a duty to identify and root out unfair, deceptive, and abusive practices in financial markets that harm consumers,” said CFPB Director Richard Cordray. “This order takes action against such practices and requires Chase to fully refund more than $300 million to consumers who were charged illegal fees.”