Tuesday, February 8, 2011

What Were They Thinking?

JP Morgan Chase has been accused of over-charging 4,000 active-duty military families’ mortgage interest rates, improperly foreclosing on at least 14 families and within weeks of this becoming public, Chase cancelled a program to defer student loan payments for active duty personnel.

A Marine Captain blew the whistle on Chase after they illegally over-charged him interest on his home mortgage after he went on active duty about five years ago. A long-standing federal law (http://www.military.com/benefits/legal-matters/scra/overview) requires banks to lower mortgage interest rates to 6% for active duty military men and women during times of war.

After a months long battle, Chase adjusted the interest rate and told the Captain he only had to pay the 6% interest rate. But after a year, the family started getting threatening collection calls at all hours of the day and night and Saturdays and Sundays.

The right hand at Chase had not told the left hand what it was doing.
Captain Jonathan Rowles hired a lawyer and sued Chase.

Then, two months ago, Chase cancelled the deferment of student loans for active duty soldiers and began insisting they pay up.

Army Private First Class Andrew Napoli is serving near Kandahar, and his wife tried to get Chase to reconsider the student loan deferment. She said they ignored her, so she called NBC News and then told Chase she had called a network television news department.

She says the next day Chase called with a change of heart. NBC quoted Chase spokesperson Kristin Lemkau as saying, “Upon review, we have decided to reinstitute the loan deferment for all active-duty service members who request it.”

Did you catch that little qualifier, “who request it.” Wonder how many who were formally notified their student loans were no longer deferred now know they can “request” it again?

Remember, we at the Institute for Crisis Management argue that two-thirds of all business crises could be prevented. This is certainly one of those “problems” Chase doesn’t need, with public attitudes about American banks and financial institutions already in the proverbial crapper.

Chase chief spokesperson Lemkau said, “We are deeply appreciative of those who fight to protect our country and Chase funds a number of programs that provide benefits to military personnel and veterans, and while any customer mistake is regrettable, we feel particularly badly about the mistakes we made here.”

She said Chase is returning about $2-million in refunds to military families and buying back and returning the 14 homes that were foreclosed on.

So what could Chase have done to prevent or minimize the damage?

First, when you are dealing with a potentially high profile customer – i.e. families of U.S. soldiers – stop and think about the ramifications of what you are about to do.

Second, when a potentially high profile customer – i.e. families of U.S. solders – asks for help and someone to listen to them, don’t even think about it. Put them in touch with someone who CAN help. If that is not your policy, more often than not, you can expect to read about the customer’s complaint in the local newspaper, on the local TV “Trouble-shooter” segment or somewhere among a million on-line blogs, tweets or other social media outlets.

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