JPMorgan Alleges Financial Planning Platform Frank Inflated Customer Base

JPMorgan Chase said it was defrauded when it bought college financial planning platform Frank.

Bloomberg reported Wednesday (Jan. 11) that the bank has brought a lawsuit against Frank founder Charlie Javice saying that she and another Frank executive, Olivier Amar, inflated the number of customers who were using the platform.

JPMorgan Chase said in its lawsuit that it made the $175 million acquisition believing that Frank had about 4.3 million customers but later learned that the platform had only about 300,000 customers, according to the report.

It alleges that Javice and Amar had someone create millions of fake accounts in order to mislead the bank as it was considering making the deal, and that they subsequently received money via the acquisition they would not have received otherwise.

Lawyers for Javice said in response to the lawsuit that JPMorgan Chase didn’t perform due diligence, rushed into the deal and launched its internal investigation of the deal in order to fire her and deny her a retention bonus, according to the report.

They also said JPMorgan filed the suit to distract from its violation of student privacy laws.

JPMorgan Chase acquired Frank in 2021 to add the company’s tools that help students apply for and negotiate financial aid, enroll in online classes and find scholarships.

The purchase was part of JPMorgan Chase CEO Jamie Dimon’s plan for the bank to be “much more aggressive” in its approach to acquisitions and followed the bank’s acquisitions of FinTechs with expertise in sustainable investing, robo-advising and constructing tax-efficient portfolios.

Frank was founded to help connect students with financial aid before they start taking on unreasonable amounts of debt, Javice told PYMNTS in a 2019 interview.

Students didn’t need another loan product — they needed an ally to help them stop leaving free money on the table in favor of taking on massive amounts of debt, Javice said at the time, explaining that most federal aid is left on the table even though 90% of applicants qualify for some form of it.

To close that gap, Frank launched an interface that automated much of the Free Application for Federal Student Aid (FAFSA).