JPMorgan Chase & Co. (JPM) will pay a $2 million fine to the Comptroller of the Currency and $25 million to reimburse customers after using “high pressure” tactics to sell credit insurance on car loans.
The bank’s customer-service representatives deceived borrowers about costs and terms of credit protection offered to cover missed payments in 2008 and 2009, the OCC said in a settlement document released today.
“Chase Auto used written scripts together with oral high- pressure sales tactics that included statements which were materially false, deceptive or otherwise misleading in violation of the Federal Trade Commission Act,” the regulator said in a statement.
JPMorgan didn’t admit or deny wrongdoing. In consultation with the OCC, the firm developed a plan to reimburse customers and fix deficiencies in credit protection linked to Chase auto, home and credit-card loans, the OCC said. Chase advertised the car-loan product, known as the Chase Payment Assurance plan, as a way to cancel some or all monthly payments in case of accidental death, disability, involuntary unemployment or a leave of absence.
“We have reimbursed affected customers and have revised our sales scripts and marketing materials for our payment protection products,” Patrick Linehan, a JPMorgan spokesman, said in an e-mailed statement. “We’ve implemented enhanced and more extensive controls to ensure that we are treating our customers fairly.”
Chief Executive Officer Jamie Dimon reassigned retail bank CEO Charles Scharf’s duties and removed Scharf from the firm’s 15-person operating committee in a shakeup of top management yesterday. Scharf’s responsibilities for overseeing auto and student lending were given to card services CEO Gordon Smith.
The bank will take “appropriate remedial actions to fully address and correct the violations of the law,” according to the OCC....
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