I’m not a fan of JPMorgan Chase CEO Jamie Dimon. Never have been. While Wall Street and the media love him for his dealmaking prowess that allowed him to transform First National Bank of Chicago into the banking behemoth Chase is today, some great Midwest banks disappeared in the process, including Bank One and National Bank of Detroit. I defy anyone to argue that the Midwest communities served by Bank One and NBD are better off because of the consolidation.
Then there’s Dimon’s virtue signaling. At the height of the BLM protests, Dimon was photographed by Chase’s PR department taking a knee in front of a suburban New York City branch. Chase also committed to spend $30 billion to fix “systemic racism,” but good luck understanding how and where that money was spent. The New York Times took a shot last fall, but the bank bamboozled the reporter with so much BS she didn’t realize she was conned. See if you can make sense of this story.
The there’s Dimon’s compensation, which is obscene even by the standards of CEO compensation in America. Dimon was paid $34.5 million in 2022, roughly the same what he was paid in 2021, despite Chase’s shares losing more than 25% of their value last year – one of the worst performances among the biggest banks. Dimon’s compensation enablers in 2021 wanted to pay Dimon a $52.6 million retention bonus, but the bank’s normally docile shareholders voted it down.
Given the big bucks Dimon is paid for his supposed banking management genius, it’s reasonable to expect that Chase would be the electronic equivalent of the Rock of Gibraltar, outfitted with an IT security system so robust that scamsters wouldn’t even try to penetrate it. After all, the presumption of safety is the primary reason many Chase customers park their money there and tolerate paltry interest rates and hefty service charges that I argue borderlines extortion.
If you are a Chase customer who banks with Dimon because you think he’s a sure bet to safeguard your money, think again.
CBS Mornings a few days ago aired a heart-wrenching story about an elderly California woman named Deborah Moss who runs a small catering business and saved up $160,000 for her retirement. Moss one day received a text notification that is common from credit card companies asking her if she approved a $35 purchase on her debit card.
Moss texted she didn’t approve the transaction and got a call from a woman named Ms. Barbara advising that Chase wanted to send her a new debit card. The call had a Chase ID, so Moss thought it was legit. Ms. Barbara sent Moss a text asking her to repeat the numbers, which she did, thinking it was a security verification process.
A few days later, Ms. Barbara called again saying that FedEx was having difficulty finding her home, which Moss said was plausible because she recently moved. Ms. Barbara sent another text, and Ms. Moss again verified the numbers. There were additional calls from Ms. Barbara saying there were issues, each time asking Moss to verify numbers from a text with Chase ID.
Moss grew suspicious and drove 30 miles from her rural home to the nearest Chase branch. The representative she spoke with informed Moss that not only had $160,000 been wired out of her account, she owed Chase an additional $895 (presumably, Moss had overdraft protection).
“I didn’t even know what a wire transfer was,” Moss told CBS.
Chase told Moss to file a police report and submit a claim with Chase. She did, but Moss subsequently received a letter from Chase advising her the bank was denying her claim because she failed to take adequate safeguards.
“During our review we found that you did not take adequate steps to protect your account from theft or unauthorized use. We will not reimburse your account,” the letter said.
Typically, when the media reports stories that put corporations in a bad light, companies are quick to say they have reconsidered their previous decisions and make things right. Even when a national news network reported on Moss’ plight, Chase didn’t offer to make her whole. Instead, it issued a statement to CBS about its supposed commitment to customer security.
Moss’ experience isn’t isolated. Local media across the country have reported on the same scam in their communities, including Seattle, Detroit, and Los Angeles, although when the Los Angeles Times reported on a Chase customer getting scammed for $10,600, the bank restored the stolen funds. That might have had something to do with the Times’ now retired consumer reporter David Lazarus, one of the best in the business, previously reporting on other Chase customers getting scammed for tens of thousands of dollars. Lazarus speculated that some of the frauds were possibly inside jobs.
I’ve featured a report by Heather Catallo, an investigative reporter with ABC’s Detroit outlet, who did a stellar job reporting on Chase customer scams in her broadcast area.
I have some personal knowledge about how Chase treats customers who are victims of fraud. About a year ago my cousin Rob discovered someone got into his line of credit and wired money from the account. He immediately went to his local Chase branch, and while he was talking to his “private banking” representative, he noticed another fraudulent transfer was pending. The rep told him there was no way to stop the transaction.
Catallo in her report featured a young woman named Amber who also noticed a fraudulent transfer was pending but was told by her rep at Chase the bank couldn’t stop the transaction.
Let that sink in: Two customers discovered an electronic bank robbery in progress and Chase told them nothing could be done.
Cousin Rob is very savvy and sophisticated, yet it took him an entire month to jump through all the hoops Chase put him through to get his stolen money returned. What finally prompted Chase to take Cousin Rob seriously was the letter he sent to federal banking regulators, which resulted in a call from “the office of the CEO” a few days later. Office of the CEO is a title shameful companies use to deceive customers that their issues and concerns are being taken seriously, but typically the representative is a run-of-the-mill customer service representative.
Chase customers around the country were also victims of another scam this year that’s possibly still going on.
The scam involves someone disabling an ATM card reader with glue. A seemingly helpful person approaches someone unsuccessfully trying to use the ATM and suggests using the card tap feature to gain account access. If a bank account is accessed using the ATM tap feature, the transaction window remains open until a customer logs out, allowing more withdrawals without requiring additional taps. As many people don’t log out after finishing their ATM transactions, the seemingly good Samaritan steps forward and makes additional withdrawals after a customer leaves.
There have been multiple media reports saying that when victims of this ATM scam reported they were defrauded, Chase denied their claims. Underscoring Chase’s shamefulness, a San Francisco resident who was a victim of a Chase ATM scam took it upon himself to film one of the ATM fraudsters in action. Even the local San Francisco television journalist who reported on the incident couldn’t believe what he was reporting. Watch it and see for yourself.
There are other issues with Chase that one wouldn’t expect at a giant financial institution overseen by a smarty pants banker being paid more than $34 million a year. If you aren’t familiar with Charlie Javice, you should be.
Javice, who is all of 31, has been criminally charged by the Department of Justice for concocting a scheme to “fraudulently induce” Chase to acquire her college financial planning platform called Frank for $175 million. Javice allegedly duped Chase into believing Frank had more than 4 million customers. Prosecutors claim Javice’s startup had fewer than 300,000 customers. Javice denies the charges.
Let that sink in. A young woman running a startup tech business allegedly suckered the due diligence team of America’s biggest bank that initiates multibillion loans to major corporations. That hardly fosters confidence.
What galls me is that three of the charges Javice faces carries a maximum of 30 years in prison. Yet when the DOJ alleged that Chase nearly three years ago engaged in a massive scheme to defraud the precious metals and U.S. Treasuries markets, the bank got off with a piddly $900 million fine. Don’t tell me that Chase is a big bank and Dimon can’t be held responsible for the wrongdoing of his employees. Fish rots from the head down, and CEOs telegraph the values and integrity they want subordinates to adhere to.
I suspect most Americans are under the delusion that U.S. banks are closely regulated and monitored by people for whom safety and soundness are the biggest priority. Here’s something that should burst their bubble.
Overseeing the recent collapse of Silicon Valley Bank at the San Francisco Fed was a woman named Mary Daly, whose official bio prior to SVB’s collapse said she was committed to “understanding the economic and financial risks of climate change and inequities.” Daly’s climate change reference has since been removed, but what should be of great alarm to Americans is that she still has a job.
With Dimon running America’s biggest bank and incompetents like Daly overseeing them, it should come as no surprise that Americans were defrauded of nearly $9 billion in 2022, a 30% increase from 2021. Fraudsters strike me as a lot savier than the folks running and safeguarding the U.S. banking system.
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