JPMorgan Chase Suing Founder of FinTech Frank for Fraud
Frank website home page screenshot

JPMorgan Chase Suing Founder of FinTech Frank for Fraud

In September of 2021, JPMorgan Chase announced that it was acquiring the FinTech startup Frank — a company started in 2017 by then-24-year-old Charlie Javice — for $175 million. Now, more than 18 months later, Chase is suing Javice and has shut down the Frank site.

As CNBC reports, the bank is accusing Javice of fraud, saying the founder manufactured a number of fake accounts. In fact, they estimate that more than four million false accounts were created, with the suit stating that there were fewer than 300,000 authentic customers of Frank at the time the firm was purchased. Furthermore, JPMorgan Chase alleges that Javice hired a data science professor to generate fake user profiles using algorithms. According to reports, the bank started to discover issues when a batch of emails was sent to 400,000 customers, only for 70% to bounce back.

With the lawsuit filed, the bank has shut down the Frank service. A message posted on the site reads, “Frank is no longer available. To file your Free Application for Federal Student Aid (FAFSA), visit StudentAid.gov.”

Javice denies the charges and has filed a separate lawsuit against JPMorgan Chase, stating that she is owed money from the bank for expenses she incurred defending herself in internal investigations she has called “groundless.” She was ultimately terminated from the company in November of last year, with Javice arguing that the bank “manufactured a for-cause termination in bad faith.” Her attorney Alex Spiro told the Wall Street Journal, “After JPM rushed to acquire Charlie’s rocketship business, JPM realized they couldn’t work around existing student privacy laws, committed misconduct and then tried to retrade the deal. Charlie blew the whistle and then sued.”

Frank was a college financial planning platform that included an Easy FAFSA tool to help students apply for financial aid. Another feature of Frank that Chase marketed in its acquisition press release was a ClassFinder, which was a marketplace showcasing discounted course options that offered transferable credits. At the time of JPM’s purchase of Frank, Javice said in a statement, “We launched Frank to make college more accessible for students and their families, and have already helped millions across the nation. We look forward to joining the Chase family to further this mission. Together, we can multiply our impact to help more students and their families achieve their financial goals and education dreams.”

For FinTech observers, this fallout from Frank will be very interesting to watch. What’s more, there are sure to be plenty of questions about the deal itself, such as how JPMorgan Chase’s due diligence efforts missed these alleged issues. Naturally, this case could also have ramifications for future FinTech acquisitions as purchasing companies may do more prodding into startup customer data before closing deals. In any case, we’ll definitely be keeping an eye on this story to see how it develops.

Leave a Reply

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get the Latest News Delivered to Your Inbox

A Guide to Building Credit and Increasing Your Credit Scores

When it comes to credit, there’s some good news. The average credit score in the United States has been steadily rising in recent years, coming in at 715 in 2023. That may be because, today, consumers not only have more ways to access their credit reports and scores than ever before but also because there are an increasing number of options that Americans have for building credit in the first...

2024 SoFi Checking and Savings Review

Ever since I started taking an interest in the FinTech sector, one company whose name I’ve seen pop up over and over again is SoFi. Lately it seems as though that theme has been sent into overdrive as the company has not only become a household name thanks to its stadium naming rights deal but also because of the company’s continued product expansions. The most interesting development in my mind...
Brim logo

Brim Financial Raises $85 Million as It Eyes Global Expansion

Toronto-based FinTech infrastructure startup Brim Financial has announced a new funding round. About the round: Brim has revealed an $85 million round. The Series C was led by EDC Investments while new investor Vistara Growth and returning investors White Owl Group, Epic Ventures, and Zions Bank also participated. To date, the company has now raised $110 million including a Series B in 2021. According to Brim, the latest funding will...
Chase Freedom Flex card

Chase Reveals Q2 2024 Freedom 5%(+) Bonus Categories

Chase has announced its bonus category picks for the second quarter of 2024 — including some interesting twists. About the categories: As April approaches, Chase has revealed what categories Freedom and Freedom Flex cardholders can earn bonuses on. From April 1st through June 30th, customers can earn 5% (or more) in three categories: Amazon.com, Hotels, and Restaurants. Similar to how Chase embraced a "New Year, New Me" theme last quarter,...
Rent Day

Bilt Announces Home Collection Deal for May 2024 Rent Day

For May's Rent Day, Bilt is offering a deal that will allow members to decrease their rent bill while also adding to their home decor. About the Home Collection offer: Bilt has crafted a unique Rent Day offer for May 2024. Through the 1st, when Bilt members redeem their points toward rent payments, they'll receive the same number of points to be used toward Bilt Home Collection items. To take...