JPMorgan Chase Bank: Data Breach Affects 500,000 Prepaid Card Holders, And The Bank's Sordid History
The bad news (and behavior) at JPMorgan Chase bank never seems to end. On Friday, NBC News reported that a data breach at the bank affected almost 500,000 prepaid card holders. Hackers gained unauthorized access to the bank's networks during July 2013. The bank's prepaid cards:
"... were issued for corporations to pay employees and for government agencies to issue tax refunds, unemployment compensation and other benefits. JPMorgan said Wednesday it had detected that the web servers used by its site www.ucard.chase.com had been breached in the middle of September..."
Unencrypted data was accessed. The bank is notifying the affect prepaid card holders, who comprise about two percent of 25 million UCard users. Network World reported that the bank will not issue replacement prepaid cards, and the card-holder notification focused on users who registered their cards between July and September of 2013.
In November, JPMorgan signed several settlement agreements with both federal and state agencies to resolve charges that the bank misrepresented residential mortgage-backed securities (RMBS) it sold to investors, including several banks that later failed. The bank paid about $13 billion in reimbursements and fines.
In September, the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) ordered JPMorgan Chase bank to pay $309 million in refunds to more than 2.1 million customers for:
"... illegal credit card practices. This enforcement action is the result of work started by the Office of the Comptroller of the Currency (OCC), which the CFPB joined last year. The agencies found that Chase engaged in unfair billing practices for certain credit card “add-on products” by charging consumers for credit monitoring services that they did not receive."
In August, the New York Times first reported about an investigation of the bank for allegedly bribing officials in China to gain lucrative contracts:
"Federal authorities have opened a bribery investigation into whether JPMorgan Chase hired the children of powerful Chinese officials to help the bank win lucrative business... In one instance, the bank hired the son of a former Chinese banking regulator who is now the chairman of the China Everbright Group, a state-controlled financial conglomerate... After the chairman’s son came on board, JPMorgan secured multiple coveted assignments from the Chinese conglomerate... The Hong Kong office of JPMorgan also hired the daughter of a Chinese railway official..."
This would appear to be a violation of the Foreign Corrupt Practices Act (FCPA), a federal law that prohibits United States companies from making:
"... payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business...."
The investigation is still ongoing. This past weekend, several news sources reported about emails by the bank with hiring children of prominent Chinese families. Violations of the FCPA are fraud, folks. This is rare but not a first in the banking industry. As the New York Times reported:
"Only a handful of Wall Street employees have ever faced bribery accusations, including a former Morgan Stanley executive in China who pleaded guilty to criminal charges in 2012..."
The above instances are the tip of the proverbial iceberg. Read more about the bank's sordid history. To me, it seems rotten to the core, and needs to be dissolved with jail-time for all senior executives.