JPMorgan Chase agrees to pay $389 million for credit card violations

WASHINGTON -- JPMorgan Chase & Co. has agreed to pay $389 million in refunds and penalties for illegally charging credit card customers for identity theft protection and other add-on services they didn't receive or authorize, federal regulators said Thursday.

The bank already has paid the refunds -- $309 million to more than 2.1 million customers,
according to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.

In addition to agreeing formally to the refunds, JPMorgan agreed in consent orders with the agencies to pay a total of $80 million in civil penalties for the violations and fix the problems.

The announcement came on the same day JPMorgan agreed to pay $920 million to settle investigations by U.S. and Britain regulators into the "London Whale" trading losses.

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During a nearly seven-year period beginning in 2005, JPMorgan charged credit card customers $7.99 to $11.99 a month for services such as monitoring their accounts for fraud and identity theft without receiving written authorization or before such authorization was given, the consumer bureau said.

Some customers never received the services or paid for them for years without receiving all the promised benefits, the bureau said. In addition, some customers had to pay extra interest or fees on their credit card accounts because the costs of the services pushed them over their balance limits.

"Put simply, Chase was charging consumers for services that they did not receive," said Richard Cordray, the bureau's director.

Unlike in the "London Whale" settlements, JPMorgan Chase did not admit any wrongdoing in agreeing to the credit card refunds and fines. The regulators said the bank stopped improperly billing customers in June 2012 and refunded the fees.

Current customers should have received credits to their accounts by Nov. 30 last year. Former customers should have received checks by the same date.

“We have already credited or refunded the customers affected," said Bill Wallace, JPMorgan's head of operations for consumer and community banking. "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.”

The consumer bureau has been cracking down on illegal tactics used to sell credit card add-on products.

In conjunction with other regulators, the bureau ordered refunds and fines against two other companies last year. Capital One agreed to refund $150 million and pay a $60-million fine, and Discover Financial Services agreed to refund $200 million to credit card customers and pay a $14-million civil penalty.

In addition, America Express Co. agreed to refund $85 million to 250,000 customers and pay $27.5 million in civil penalties after the bureau, along with other federal and state regulators, determined numerous violations of consumer protection laws involving credit card marketing and services.

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