Following reports this week of Chase sending refunds to cardholders, two federal agencies have ordered Chase to refund $309 million to 2.1 million credit card holders for unfair billing practices related to add-on products it sold them. The bank also received an $80 million fine.
The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau said Thursday that the bank offered consumers identity-theft protection services that would monitor their credit and alert them to potentially fraudulent activity for a monthly fee.
However, the bank did not provide the full benefits of the service, charged customers upfront before providing the service and charged customers who didn't provide authorization, according to the CFPB. In some cases, consumers paid interest charges and fees when the service fee automatically re-upped on their credit card and exceeded their limits, the CFPB said.
Chase said in a statement that it had credited or refunded all customers who were affected. The bank stopped enrollment in these products in the middle of last year and won't offer them anymore by the end of the year. It called the billing practices "regrettable."
Chase is the third credit card issuer to land in hot water with the CFPB and OCC over its credit card add-on products. Last year, Capital One and Discover both had to refund and pay fines totaling hundreds of millions of dollars due to the marketing of their add-on products.
"The CFPB's fine amounts continue to be staggering," says John Ulzheimer, credit expert for Credit Sesame. "(And their) actions continue to send a clear message to companies that sell enhancement services that they better do right by the consumer or they may be asked to give back any revenues received, and then some."
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