The U.S. Consumer Financial Protection Bureau (CFPB) has ordered JPMorgan Chase to pay $4.6 million for allegedly failing to disclose accurate information in checking account screening reports.
Checking account screening reports have a function similar to credit reports and are used by financial institutions to help determine if they will allow customers to open new accounts. These reports are generally provided by third-party companies such as Certegy Check Services, ChexSystems and Early Warning Services, among many others.
According to the CFPB’s allegations, Chase’s procedures to ensure it gave third-party companies accurate information were not sufficient. The results of that insufficiency could have created problems for consumers — namely those with clear reports who were unable to open accounts for no reason.
The bad reporting also could have led to customers with problematic credit histories being allowed to open accounts. According to the CFPB, JPMorgan Chase did not admit or deny the agency’s findings.
“Since identifying the issue three years ago, we’ve significantly improved our procedures for sharing information with agencies,” said Anne Pace, JPMorgan Chase spokeswoman.
The CFPB, also noted that thousands of consumers had argued information Chase provided to the services between July 2010 and December 2014, but consumers did not learn the results of the investigations into their disputes. Chase turned down 17,500 checking accounts during that time due to adverse information it received in screening reports, but the company did not note where it received the information.
The bank later sent out corrected notices.
As part of the consent order signed by CFPB director Richard Cordray, JPMorgan Chase has agreed it will create “reasonable procedures for checking accuracy.” It will also inform consumers of the results of dispute investigations, and provide those who were denied accounts with access to contact details of the screening company.