Lender JPMorgan Chase and Co. will have to pay a fine of $25 million to reimburse customers after using ”high pressure” tactics to sell credit protection with its auto loans. JPMorgan will also be responsible for paying the Office of the Comptroller of the Currency (OCC) $2 million in fines after it was decided that the bank had deceived its customers.
Bank Representatives Lied about Costs and Terms of Credit Protection
The OCC announced in a settlement document on Wednesday that JPMorgan Chase’s customer service representatives deceived borrowers about the costs and terms of its credit insurance, known as the Chase Payment Assurance plan.
The protection was offered to cancel some or all monthly payments missed in 2008 and 2009 as a result of accidental death, disability, involuntary unemployment or leave of absence.
The OCC determined that Chase Auto, a subsidiary of JPMorgan Chase, combined written scripts with oral high-pressure sales tactics, including statements that were “materially false, deceptive or otherwise misleading,” to sell coverage.
The regulator said these acts were in direct violation of the Federal Trade Commission Act.
Chase to Reimburse Customers
While Chase did not admit or deny wrongdoing, it did develop a plan to reimburse customers and fix its deficiencies in credit protection linked to its auto loans, as well as its mortgage loans and credit card loans.
JPMorgan spokesman, Patrick Linehan, said in an e-mailed statement, “We have reimbursed affected customers and have revised our sales scripts and marketing materials for our payment protection products.”
The bank went one step further recently by removing retail bank CEO Charles Scharf from the firm’s 15-person operating committee. His responsibilities for overseeing student and auto lending were given to card services CEO Gordon Smith.
Overall, the bank says it has implemented “more enhanced and extensive controls” to make sure that customers are treated fairly in the future.
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