J.P. Morgan Chase & Co. agreed to pay $4.6 million to settle allegations it didn't properly inform people about why their account applications were denied, a federal regulator said Wednesday.
The Consumer Financial Protection Bureau said the bank was "keeping customers in the dark" about screening it conducts on potential customers using information about customer behavior that is compiled by third-party companies. Banks supplying consumer data to companies such as Chex Systems and Early Warning Systems are required to ensure the information is accurate.
The CFPB said Chase didn't have an accuracy process in place between 2010 and 2014 and didn't provide consumers required information about application denials and disputes.
"Since identifying the issue three years ago, we've significantly improved our procedures for sharing information with agencies," a spokeswoman for Chase said.
The CFPB said Chase, like other banks, provides information to companies that collect and report negative information about consumer checking accounts, including whether an account was closed due to an unpaid negative balance or due to suspected fraudulent activity.
Banks are required to provide consumers with the name and contact information of the company that supplied any information used to screen customers' account applications. Between October 2014 and February 2015, Chase sent denial notices to approximately 17,500 checking account applicants, according to the CFPB. These notices, it said, didn't identify the reporting company that supplied negative information Chase relied on in making account decisions.
In addition to paying the penalty, the bank agreed to implement policy changes to prevent further violations, the CFPB said.
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(END) Dow Jones Newswires
August 02, 2017 16:17 ET (20:17 GMT)