JPMorgan Probed Over Alleged Mishandling of Fraud Cases

Federal prosecutors have been reviewing allegations that JPMorgan Chase mishandled fraud cases and improperly denied reimbursements to customers whose money was stolen, according to people familiar with the matter.

The review was sparked by a whistleblower report last year by Christy Lillie, then-head of scam prevention at JPMorgan. The bank's executives allegedly ignored deficiencies in its antifraud program and failed to properly handle a surge in scams driven by sophisticated criminal operations in Southeast Asia and Africa.

Lillie alleged that JPMorgan took steps to minimize its own losses at the expense of customers' savings, and that the bank failed to use voice identification technology as widely as it should and relied on one-time passcodes that are easily circumvented by scammers. She also claimed that JPMorgan failed to identify and flag tens of thousands of suspicious accounts for potential closure, a potential violation of anti-money-laundering rules.

JPMorgan has denied any wrongdoing, stating that its reimbursement standards met or exceeded what the law required and that it had found no evidence supporting Lillie's claims. However, the bank did acknowledge that it was enhancing its fraud and scam prevention program as criminals find new ways to target consumers.