California Attorney General Bill Lockyer has accused two JPMorgan Chase & Co. subsidiaries and the third-party marketer Trilegiant Corp. of deceiving thousands of elderly and illiterate customers.
JPMorgan Chase gave Trilegiant, a Cendant Corp. unit based in Norwalk, Conn., access to its customers, according to a suit filed Tuesday in San Diego County Superior Court.
Trilegiant then marketed discounts on memberships on car, home repair, shopping, and other services to JPMorgan Chase customers sometimes using marketing materials in monthly bank statements, according to a summary of the suit
Customers unknowingly paid for memberships after the "discounts" expired, the suit claims. JPMorgan Chase received "substantial" compensation for participating in the scheme, the Attorney General's Office said.
The JPMorgan Chase units named are Chase Bank USA and Chase Manhattan Mortgage Corp.
California is not the only state looking into the issue. Also on Tuesday, Maine Attorney General Steven Rowe issued a "notice of intent" to sue the companies on similar grounds for violating Maine's Unfair Trade Practices Act. Connecticut also filed a suit on Tuesday against Trilegiant.
JPMorgan Chase failed to "adequately provide consumers knowledge of what they were getting into," said Tom Dresslar, a spokesman for the California attorney general. Then it failed "to provide them means to get out," he said.
Mr. Dresslar said it was the first California lawsuit against a large bank partnering with a third party specifically to sell membership programs.
California is seeking civil penalties from JPMorgan Chase and Trilegiant for violating its unfair business practices law and false or deceptive advertising laws and an additional $2,500 if a senior citizen was affected by the scam.
California is also seeking to bar the companies from engaging in future deceptive practices, and Maine said it intends to do so.
JPMorgan Chase declined to discuss the issue Wednesday.
