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JPMorgan Chase, the U.S. multinational investment bank, is suing the college planning platform Frank Financial Aid, which it acquired in 2021, The Wall Street Journal reported.
The bank, which brought Frank for $175 million, alleged in a court filing that the company created a list of more than four million fake customers, including names, addresses and dates of birth.
“JPMC paid $175 million for what it believed was a business deeply engaged with the college-aged market segment with 4.265 million customers; instead, it received a business with fewer than 300,000 customers,” the bank’s complaint says.
The company connects students with scholarships and helps them complete the Free Application for Federal Student Aid via an online platform that’s free to use, though company officials previously said they charged colleges and universities an annual fee. JPMorgan Chase officials have said that they hoped acquiring Frank would help the bank deepen relationships with college-aged students.
Before buying the company, the bank sought a list of Frank’s customers as part of the due-diligence process but was initially rebuffed by Frank CEO and founder Charlie Javice, according to the complaint.
The bank alleged that Javice paid a data science professor from a New York City–area college $18,000 to create a customer database of 4.265 million names. The company also purchased a list of student names from a marketing company for $105,000 as part of the effort to create the list, according to the complaint.
Alex Spiro, a lawyer representing Javice, told The Wall Street Journal that the lawsuit was “nothing but a cover.”
“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,” Spiro said.
