Key Takeaways:
Federal prosecutors reviewed claims that JPMorgan Chase denied more than $100 million in reimbursements to customers whose money was stolen by scammers.
Federal prosecutors reviewed claims that JPMorgan Chase executives ignored flaws in the bank's antifraud program and improperly denied more than $100 million in reimbursements to customers whose money was stolen, according to people familiar with the matter.
"We believe these claims have no merit," a JPMorgan spokeswoman said. "We took the concerns seriously, carefully reviewed them, and found no evidence of wrongdoing or violations of law."
The review was triggered by a whistleblower report last year from Christy Lillie, JPMorgan's then-head of scam prevention. Representatives from the U.S. attorney's office in Manhattan and the Treasury Department met with Lillie and later received documentation tied to her claims, the people said. Prosecutors haven't alleged any wrongdoing by JPMorgan, and it couldn't be determined whether they are still investigating the allegations.
The allegations expose the stakes for banks in the epidemic of scams, which law enforcement estimates cost Americans tens of billions of dollars annually. If the investigation escalates, JPMorgan could face regulatory penalties, reputational damage, and potential class-action exposure from customers denied reimbursement.
At the core of Lillie's allegations is a distinction banks make between frauds and scams, which dictates how customer claims are handled. A 1978 law requires banks to screen for fraudulent activity, such as charges made with stolen account information, and reimburse customers for unauthorized transactions. That law doesn't necessarily protect consumers from scams, where people are tricked into sending money to bad actors — banks view those as voluntary payments.
But the line between frauds and scams can be blurry in practice, according to a February letter that Lillie's lawyer sent to multiple Senate committees. A scammer might break into customer accounts without authorization, then later induce them to voluntarily send a payment. Rather than classifying the incident as fraud, JPMorgan often deemed it a scam and refused to reimburse the customer, the letter said.
In other cases, Chase denied claims covering certain electronic transactions by customers who inadvertently help a scammer, such as when they reveal credentials believing they are speaking with a bank representative. Other large banks since 2021 have acknowledged they are required to reimburse customers in such cases, the letter said. Chase had internally calculated the cost of changing its fraud reimbursement policies, with $100 million a "bare minimum," the letter said.
Lillie, who spent most of her career working on fraud prevention, was hired by JPMorgan in 2021 to help strengthen the bank's defenses. Over time, her team identified serious deficiencies in the bank's antifraud program, according to the letter. It said JPMorgan failed to use voice identification technology as widely as it should and relied on one-time passcodes that scammers easily circumvent.
After disclosing to her supervisors that she had become a whistleblower last year, Lillie was placed on involuntary paid administrative leave in October 2025 and later left the bank. She is currently represented by lawyers at Phillips & Cohen. Lillie and her lawyers met for hours with the Justice and Treasury departments to discuss her disclosures, and she also communicated with Senate investigators.
Lillie has also alleged that JPMorgan failed to identify and flag tens of thousands of suspicious accounts for potential closure, a potential violation of anti-money-laundering rules. She provided lists of thousands of suspicious transactions to the U.S. attorney's office, according to the letter.
The JPMorgan case could set a precedent for how the largest U.S. banks handle scam reimbursements. Scammers have become increasingly adept at duping customers into sending payments through elaborate social engineering schemes, including by developing romantic connections to victims. Some customers have sued their banks, arguing they should have done more to protect them or question the payments.
Federal investigations can carry on for years before prosecutors decide whether to press charges or simply close the matter. The Justice Department under President Trump has sharply pulled back from the prosecution of many types of white-collar crime. JPMorgan shares rose 0.48 percent to $359.24 in Thursday trading.
"We're always enhancing our fraud and scam prevention program as criminals find new ways to target consumers," the JPMorgan spokeswoman said. She disputed any suggestion that there was an effort to deliberately disadvantage customers, saying the bank's reimbursement standards met or exceeded what the law required.
This article is for informational purposes only and does not constitute investment advice.
