Banking & finance

Chase will cut services linked to credit cards

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October 24, 2013

JPMorgan Chase & Co. is dropping two credit-card services that help consumers monitor their credit reports and make payments in case of financial hardship.

Chase, the largest private employer in the region, says no local employees will be affected as the bank discontinues the services. The bank has announced two rounds of job cuts in the region affecting about 700 or so employees in mortgage-related operations.

“We are aiming to simplify the set of products and services we offer customers,” Chase spokesman Paul Hartwick said.

Hartwick said fewer than 1 million customers remain in either program. The bank has 50 million credit-card customers.

Banks, in general, have been moving away from offering these kinds of services, said Ben Woolsey of CreditCards.com.

The products have received greater regulatory scrutiny in recent years and banks, meanwhile, have turned their focus more on customers with higher credit quality, which reduces the bank’s risks, he said.

“The other services had fairly limited value to consumers,” he said.

Last month, the Consumer Financial Protection Bureau ordered Chase to refund $309 million to 2.1 million customers who used the credit-monitoring service.

The product provided consumers access to their credit reports from the three main credit-reporting agencies, alerts that could indicate some sort of fraudulent use of their identity and fraud-protection services. More-elaborate levels of service even monitored public records for any sign that a new public record had been created in their name.

The service costs $7.99 to $14.99 per month, depending on the level of service.

The bank stopped taking new customers for the service in 2012. It will be discontinued before the end of the year.

The bureau and Office of the Comptroller of the Currency found the bank charged many consumers for these products without or before having the written authorization necessary to perform the monitoring services from the time the service began in October 2005 to June 2012.

“We have already credited or refunded the customers affected,” Bill Wallace, head of operations for consumer and community banking, said in a statement when the settlement was announced last month. “Any mistakes like these are regrettable and we are committed to ensuring our partners and vendors hold themselves to the same high standards that our customers expect of us.”

The second product was a payment-protection plan for customers experiencing financial hardship.

The plan suspended minimum monthly payments and waived monthly interest and plan fees for those who lost their job, became disabled or were called to military duty, in addition to several other reasons. It also would cancel an account balance up to $25,000 in the event of the customer’s death.

The payment-protection plan ends in May 2014. Customers were told last May about the decision and were given the last year of service at no cost.

“We believe one year’s notice and 12 months of fee-free coverage gives customers time to evaluate their options and make any decisions based on their individual needs,” Hartwick said.

Woolsey said in the cases of both products, there are things consumers can do on their own that could be cheaper or even free and accomplish much of the same task.

He said credit-card companies often are willing to work with customers who are unable to make their payments, and consumers can reach out to the three major credit-reporting firms for a free copy of their credit report once a year. Those firms also offer similar credit-monitoring programs for consumers who want them.

“Anything that is sold or attempted to be sold by your card issuer or one of their affiliates, my advice is to shop around and ask if you truly need it,” he said. “It’s probably more in their best interest than your interest.”

mawilliams@dispatch.com