The JP Morgan Chase & Co. headquarters, the JP Morgan Chase Tower on Park Avenue, Midtown, Manhattan, New York.
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Earlier this week, JPMorgan Chase shut down college financial aid platform Frank, which it acquired for $175 million in September 2021, claiming it was misled about the scale of the startup.
Consumers who used the platform may also have been scammed.
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According to JPMorgan, founder of Frank Charlie Javice told the bank that over 4 million students had signed up with the company, which promised to simplify the student loan and grant application process. But when the bank sent out marketing emails to a group of 400,000 Frank customers, around 70% of the messages came back, the bank said in a Lawsuit filed last month in federal court.
Earlier, JPMorgan spokesman Pablo Rodriguez referred a CNBC reporter to his lawsuit against Javice, saying that “any dispute will be resolved through a jury trial.” Javice’s attorney, Alex Spiro, did not respond to an email seeking comment.
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Before JPMorgan acquired the startup in 2021, lawmakers and a consumer protection agency raised concerns about Frank’s marketing claims.
Bipartisan members of Congress wrote a letter to the Federal Trade Commission in July 2020, saying Frank had “created false hope and confusion among students” by submitting a request for pandemic-era aid funds, including those newly available emergency grants for students.
“These funds are distributed by and at the discretion of each institution and it is therefore impossible to provide a legitimate, uniform application for these funds,” the lawmaker said wrote, They added that they suspect the company of exploiting student data for profit.
In response, the FTC sent a dunning letter According to Frank, reference to a number of claims on his website “could unlawfully mislead consumers”. For example, it said consumers could get a cash advance of up to $5,000 on their student loans without being charged interest or fees, although Frank charged a fee of $19.90 per month.
In addition to the problems reported by government officials, higher education expert Mark Kantrowitz noted other questionable claims made by Frank. At one point, the company said it could fill out the Free Individual’s Application for Federal Student Aid (FAFSA) in just four minutes.
According to the US Department of Education, he found that it takes time about an hour for new applicants to fill out the form, which is the main way students apply for financial aid to help them pay for college.
“If it’s too good to be true, it probably is,” Kantrowitz said.
There are many free resources families can turn to for help with financial assistance, said Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit organization.
“The simplest thing to keep in mind is that nobody ever has to pay for a student loan or financial aid,” Mayotte said. “This means you’ll never get access to a program that you wouldn’t normally be eligible for.”
The best place to look for this help is on the Department of Education website, studentaid.govsaid Mayotte.
https://www.cnbc.com/2023/01/13/jpmorgan-says-college-planning-firm-it-bought-lied-about-its-size.html JPMorgan says the college planning company that bought it lied about its size