JPMorgan says college-planning firm it bought lied about its size

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The JP Morgan Chase & Co. headquarters, The JP Morgan Chase Tower in 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 in September 2021 for $175 million, alleging it was misled about the scale of the startup.

Consumers who used the platform may have also been deceived.

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According to JPMorgan, Frank founder Charlie Javice told the bank that over 4 million students had signed up with the company, which promised to ease the student loan and financial aid application process. But when the bank sent out marketing emails to a batch of 400,000 Frank customers, around 70% of the messages bounced back, the bank said in a lawsuit filed last month in federal court.

Earlier, JPMorgan spokesman Pablo Rodriguez referred a CNBC reporter to its lawsuit against Javice, saying that “any dispute will be resolved through the legal process.” Javice’s lawyer, Alex Spiro, did not respond to an email requesting comment.

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‘If it’s too good to be true, it probably is’

FAFSA: Finding financial aid

In response, the FTC sent a warning letter to Frank, pointing out a number of claims on its website could be “unlawfully misleading consumers.” For example, it said consumers could obtain a cash advance of up to $5,000 on their student loans without being charged any interest or fees, although Frank charged a fee of $19.90 a month.

Besides the problems flagged by government officials, higher education expert Mark Kantrowitz said he noticed other questionable claims made by Frank. At one point, the company said it could complete people’s Free Application for Federal Student Aid, or FAFSA, in just four minutes.

According to the U.S. Department of Education, he noted, it takes about an hour for new applicants to complete the form, which is the main way students request financial aid to help them pay for college.

“If it’s too good to be true, it probably is,” Kantrowitz said.

Student loan, financial aid help is available for free

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