The Consumer Financial Protection Bureau ordered JPMorgan Chase on Wednesday to pay a $4.6 million fine for failing to provide accurate information to consumers and reporting agencies when denying checking account applications.
The agency said Chase did not have adequate policies in place when reporting information to specialty credit reporting agencies that collect negative information about consumer accounts, in violation of the Fair Credit Reporting Act.
The bank also failed to give consumers who disputed the negative information the name of the reporting company and the results of its own investigations that resulted in the denials of a checking account application.
“Information about checking account behavior is used to determine who can open a bank account,” CFPB Director Richard Cordray said in a press release. “Chase did not have the required processes to report this information accurately, and kept consumers in the dark about reporting disputes and application denials."
Anne Pace, a JPMorgan spokeswoman, said in a statement, "Since identifying the issue three years ago, we have significantly improved our procedures for sharing information with agencies."
Consumer advocates have complained for years that banks have used specialty consumer reporting agencies to deny as many as 1 million low-income consumers access to checking accounts.
Banks provide the negative information, such as whether an account was closed because of an unpaid negative balance or suspected fraud, to the companies, such as ChexSystems, a unit of Fidelity National Information Services, and Early Warning Systems, a Phoenix company created by a consortium of large banks.
Chase sent denial notices to roughly 17,500 checking account applicants from October 2014 to February 2015 but failed to provide the name and contact information of the specialty reporting company to consumers, the CFPB said.
Between July 2010 and December 2014, Chase also failed to provide consumers who disputed the negative information with the results of an investigation into their dispute, as required by law, the CFPB found.
Chase must put policies and procedures in place to ensure information sent to specialty credit reporting companies about consumers' checking account behavior is accurate.
The bank also must report results of its investigations to consumers who file disputes and provide consumers with the contact information of the credit reporting companies.