Chase has reportedly sent an undisclosed amount of refunds to credit card holders last year and early this year for problems with add-on products it sold them, according to a report Tuesday by The Wall Street Journal. The moves come ahead of an expected settlement between the bank and federal regulators over certain credit card practices.
The report said cardholders paid around $12.95 a month for identity-theft protection and payment protection, which allows cardholders to miss a payment after a qualified hardship, such as a job loss. The report didn't disclose how the bank violated any rules regarding these products.
The Consumer Financial Protection Bureau, or CFPB, and Chase declined to comment.
Last week, a Bloomberg report said that the bank is expected to settle an investigation over its debt-collection practices and ID-theft protection products for less than $80 million with the Office of the Comptroller of the Currency, or OCC, and the CFPB. The report did not disclose whether the settlement included refunds or just fines.
Last year, the CFPB started probing add-on products that credit card companies sell for an additional fee. Discover and Capital One last year landed in hot water after the CFPB and the OCC said they deceptively marketed these products, such as payment protection, identity theft protection, credit score tracking and wallet protection. Both issuers paid hundreds of millions of dollars in refunds and fines for the practices.
The enforcement actions prompted some issuers to stop offering these products or cut back efforts to sell them. Chase stopped selling its payment protection plans in October 2011. It also halted sales of its identity-theft protection plans in March of last year, according to The Wall Street Journal.
Chase also came under an OCC investigation last year for more than 20,000 Chase accounts that allegedly contain falsely inflated balances on delinquent accounts or lack of documents for judgments on cases that went into collections.
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