Banks are increasingly monitoring customer reputation: an investigation by Business Insider
Business Insider publication told the story of one of the customers of American bank JPMorgan Chase. Despite the ideal credit history, the bank suddenly decided to break off relations with him and closed all his accounts.
Experts interviewed by journalists said that the reason for such a decision could be the client's reputation - his name flashed in the negative news, when the company where he worked was accused of violations by regulatory authorities. We present to you the main facts of this story.
Bryan Sequeira, a thirty-two year old, was a customer of JPMorgan Chase, an American bank, who had several credit cards in this organization. Everything was going well, until one day he received a notice from the bank that all his cards and accounts would be closed within two months. The company refused to provide the client with any explanation of what happened, in addition to the phrase in the letter he received that "cooperation creates reputational risks."
Sekveira is a citizen of India, however, he has been living in the USA for a long time and is a holder of a green card. He received an American education and since the beginning of the two thousandth he has been purposefully engaged in building a credit history. He made payments on credit cards on time, did not use a large amount of borrowed funds, spent money predictably. He never had a problem with card approval.
As the journalists of Business Insider found out, the reason for the breakdown of relations with the client on the part of the bank could be the analysis by the scoring systems of the client’s reputation based on the data published on the Internet.
What the client did wrong
Sekveira exemplary citizen who is not involved in any crimes and did not commit known offenses. However, one of its former employers was eClinicalWorks, the company was accused by regulators of unscrupulous advertising of its software (the storage system of medical records of patients) and the use of "loopholes" for faster passing of certain certifications.
As a result, eClinicalWorks paid a fine of $ 155 million, but the company’s management refused to admit its guilt. Officially, the company said it agreed to pay the fine only to avoid even more costly and lengthy litigation.
Some company employees, including top management and some executives, also paid fines for the same purpose. Sekveyra, who held the post of project manager, was among them. He paid $ 15,000, but, like his colleagues, he did not recognize any illegal actions. An important fact: none of the employees of eClinicalWorks was ultimately sentenced to imprisonment or at least officially charged with crimes.
As experts from the financial market interviewed by journalists explained, the mention in the news in connection with this case could be enough for the scoring system to attach to Sekveir an undesirable client after he had approved a credit card.
Why it became possible
JPMorgan Chase's customer rating systems are considered one of the most advanced in the world. Not least, the bank owes the story around the pyramid created by Bernie Medof.
As part of the investigations into his crimes, it turned out that the system of tracking crimes and money laundering at the bank was not of sufficient quality and did not meet AML (anti-money laundering) standards. As a result, JPMorgan received a fine of $ 2.6 billion. Since then, scoring and other customer rating systems have been significantly improved, and the bank has gained a reputation as one of the most aggressive in terms of terminating customer relationships for which there is even the slightest suspicion.
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