It’s common practice for banks to screen potential customers’ past banking history before enabling them to open a checking account, but one financial institution has run afoul of the Consumer Financial Protection Bureau (CFPB) for not guaranteeing the accuracy of this information.
In an announcement yesterday, the consumer agency alleged that JPMorgan Chase Bank did not have proper procedures in place to guarantee the accuracy of checking account screening reports, which constitutes a violation of the Fair Credit Reporting Act. As a result, consumers were allegedly unable to open accounts and denied information about why they were rejected.
“Information about checking account behavior is used to determine who can open a bank account,” said CFPB Director Richard Cordray. “Because Chase did not have the required processes to report this information accurately, and kept consumers in the dark about reporting disputes and application denials, the Consumer Bureau is imposing a $4.6 million penalty and other measures to stop these violations in the future.”
Under the terms of the CFPB’s order, Chase will be required to change its procedures and policies to ensure that consumers’ checking account behavior is accurately reported to consumer reporting companies. The company must also report the results of its investigation to consumers who filed disputes against the bank over the information it sent to consumer reporting companies.
Further, the CFPB stipulates that Chase provide consumers with the contact information of the consumer reporting company that supplied information which Chase used to deny their applications for a deposit account.
The agency says that $4.6 million penalty will be put into the Bureau’s Civil Penalty Fund. More information on the consent order can be found here.