CFPB Takes Action against Chase for Checking Account Screening Failures

August 2, 2017

On Wednesday, August 2, 2017, the CFPB took action against JP Morgan Chase for failures related to information it provides for checking account screening reports. Banks screen potential customers based on reports about prior checking account behavior created by consumer reporting companies. Banks supplying information for those reports are legally required to have proper processes in place for reporting accurate information. The CFPB claimed Chase did not have these processes in place and allegedly kept consumers in the dark about the results of their reporting disputes and key aspects of their checking account application denials. The Bureau ordered Chase to pay a $4.6 million penalty and implement necessary changes to its policies to prevent future legal violations.

 

Chase is a national bank based in Columbus, Ohio providing numerous consumer financial products and services, including checking and savings accounts, money market accounts, mortgages, personal loans, credit cards, and auto loans. Chase furnishes information about its checking accounts to nationwide specialty consumer reporting companies. These companies which include Chex Systems and Early Warning Systems, collect and report negative information about consumer checking accounts, such as whether an account was closed due to an unpaid negative balance or due to suspected fraudulent activity.

 

The Bureau asserted Chase violated the law by failing to comply with its obligations outlined in the Fair Credit Reporting Act by not having adequate policies in place regarding the accuracy of information it reported about consumers’ checking account behavior. The CFPB also claimed Chase failed to provide consumers who disputed their information with the results of its investigation, and failed to tell certain consumers which consumer reporting company supplied the information that resulted in Chase’s denial of their checking account application.