By Dena Aubin

NEW YORK (Reuters) - JPMorgan Chase & Co has been hit with a proposed class action lawsuit accusing it of printing Social Security numbers on the outsides of form letters mailed to customers to tell them about the bank's efforts to protect their private information.

Filed on Thursday in federal court in Chicago, the lawsuit accused the largest bank in the United States of violating federal and state laws and subjecting its customers to increased risk of identity theft.

A JPMorgan spokeswoman declined comment.

The allegations are another embarrassment for the financial company amid a rash of civil and criminal probes, ranging from the massive "London Whale" trading scandal to possible bribery in China.

On Thursday, it disclosed $1 billion in payouts to settle four civil regulatory probes.

The new lawsuit was filed on behalf of Alexander Furman, a Buffalo Grove, Illinois resident, who said JPMorgan twice mailed him preprinted forms with his name, address and Social Security number on the outsides, and failed to follow up on his complaints.

The first mailing, sent around September 1, was a privacy notification explaining how JPMorgan safeguards customers' personal information, according to the lawsuit.

Furman complained immediately and was told the bank would rectify the situation, according to the lawsuit.

Even so, Furman received a benefit notification from the bank about two weeks later with his social security number still printed on the front, the lawsuit said.

COVETED BY THIEVES

"It (the bank) should have immediately notified its customers and certainly taken steps to prevent it happening the second time," said Elizabeth Fegan, a partner at Hagens Berman law firm in Oak Park, Illinois, who filed the suit.

The lawsuit cited JPMorgan's own warning, in online information about its security procedures, that a name combined with a Social Security number is a prime way for thieves to steal an identify.

"It's very damaging," Fegan added. "Chase even says on its Web site that providing Social Security numbers to an identity thief is 'as good as gold.'"

Disclosure of Social Security numbers can be especially harmful since they cannot easily be replaced, like a credit or debit card, the lawsuit said.

Among other violations, the lawsuit alleged that Chase broke Illinois' consumer fraud act, which prohibits the printing of Social Security numbers on mailings. Several states have passed such laws to help combat identity theft.

The lawsuit seeks class action status representing any JPMorgan customers who received mailings with their Social Security numbers printed on the outside. It said thousands or possibly millions of customers could be part of the class.

Fegan said she has not received confirmation from the bank about how many customers were affected, but the forms appeared to be mass mailings.

The case is Alexander Furman et al v JP Morgan Chase & Co et al, No. 13-cv-06749, U. S. District Court, Northern District of Illinois.

(Additional reporting by Jonathan Stempel; Editing by Kevin Drawbaugh and Andre Grenon)

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