(Reuters) -JPMorgan Chase & Co on Thursday shut down its Frank website, a college financial planning platform it bought in 2021, after suing the startup's founder and another executive for creating nearly 4 million fake customer accounts.
The largest U.S. bank by assets had paid $175 million for Frank in a bid to deepen its ties with students. The bank said it was led to believe by founder Charlie Javice and Chief Growth Officer Olivier Amar that more than 4.25 million students had created accounts on Frank.
However, when JPMorgan (NYSE:JPM) sent marketing test emails to a list of Frank's customers that the company had provided, only 28% of them were delivered, the bank alleged.
JPMorgan said it generally sees a delivery rate of 99% with similar campaigns.
"(JPMorgan) 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 said in the lawsuit filed last month.
An attorney for Javice, however, denied the allegations.
The founder had sued JPMorgan a few days earlier, alleging that the bank terminated her employment in November "in bad faith", seeking to avoid $28 million in payments that were due to her after a "series of groundless investigations" into her conduct.
"After JPM rushed to acquire (Javice's) rocketship business, JPM realized they couldn't work around existing student privacy laws, committed misconduct and then tried to retrade the deal," Javice's attorney said, adding that the bank's lawsuit was "nothing but a cover".
On Thursday, Frank's website said it was no longer available.
"Ms. Javice was not and is not a whistleblower. Any dispute will be resolved through the legal process," a spokesperson for JPMorgan said in an emailed statement to Reuters.