Category Archives: JPMorgan Chase

JPMorgan Chase Agrees to Pay $110 Million in Overdraft Class-Action Lawsuit

JPMorgan Chase & Co. is one step closer to a possible settlement of a class-action lawsuit brought against a number of banks over their so-called transaction-ordering practices. “We’re pleased to have reached an agreement in principle,”  said spokesman Patrick Linehan, in which the bank has agreed to pay $110 million. That would settle customer claims that JPMorgan Chase charged excessive overdraft fees by processing transactions by dollar amount from highest to lowest rather than chronologically, which increased the number of overdraft fees incurred by account holders. Reuters’ coverage of the suit describes how one plaintiff was charged $204 in overdraft fees because of the bank’s high-to-low transaction-ordering method, whereas if her transactions had been processed chronologically, she would have incurred only a single fee.

Chase’s settlement of its portion of the suit still needs approval from the judge presiding over the case, which was filed in U.S. district court in Miami. While $110 million might seem like a significant amount, it’s dwarfed by the $410 million Bank of America agreed to pay in November to settle its portion of the same suit, which included more than 30 national and regional banks.

Banks that are still embroiled in the litigation include Wells Fargo & Co., Citigroup, Capital One Financial and PNC Financial Services Group. Wells Fargo is also involved in another overdraft suit in California, where it appealed a judge’s order that it pay $203 million for its actions.

In 2010, the Federal Reserve cracked down on what was then the common practice of banks enrolling customers automatically in overdraft “protection” programs that would process debit purchases even if the transaction would result in an overdraft, then charging fees that could climb as high as $35.

Many of the larger banks in the U.S. have now abandoned the practice of processing a day’s transactions from highest to lowest dollar amount. It’s still a good idea for customers to check their bank’s policy, seeing as how we collectively paid nearly $30 billion in overdraft fees last year. Although the Fed rules don’t permit a bank to automatically process debit purchases that would overdraw the customer’s account, overdrafts can still be triggered by payments made by check or auto-pay transactions.

JPMorgan Chase To Pay $110 Million To Settle Accusations Of Excessive Overdraft Fees

90bc1a3d-222e-4a7b-8588-3a30f4147b6cFeb 6 (Reuters) – JPMorgan Chase & Co has agreed to pay $110 million to settle consumer litigation accusing it of charging excessive overdraft fees.

The largest U.S. bank by assets joined Bank of America Corp and several smaller lenders in settling their portion of the nationwide litigation over the fees, which are typically assessed when customers overdraw their checking accounts.

Consumers had accused more than 30 lenders of routinely processing transactions from largest to smallest rather than in chronological order.

This can cause overdraft fees, typically $25 to $35, to pile up because account balances fall faster when larger transactions are processed first. Critics say this disproportionately burdens customers with lower incomes and balances.

JPMorgan’s settlement in principle was disclosed in a filing on Friday with the U.S. district court in Miami.

The settlement requires negotiation of final documentation and approval by U.S. District Judge James Lawrence King, who oversees the nationwide litigation. It also calls for an unspecified change to JPMorgan’s overdraft practices.

JPMorgan spokesman Patrick Linehan said the New York-based bank was pleased to settle in principle.

Robert Gilbert, a lawyer for the plaintiffs, did not immediately respond to requests for comment.

In September 2009, JPMorgan said it would henceforth post debit card transactions and ATM withdrawals as they occur, and end debit card overdrafts unless customers ask for them.

The next year, the Federal Reserve barred banks from charging overdraft fees on electronic and debit card transactions without advance customer approval.

Bank of America last year settled its part of the nationwide litigation for $410 million, the largest agreement so far.

Capital One Financial Corp, Citigroup Inc, PNC Financial Services Group Inc, US Bancorp and Wells Fargo & Co are among banks that have not settled.

Wells Fargo has appealed a San Francisco federal judge’s $203 million award in August 2010 to California consumers in another overdraft case.

The JPMorgan case was brought by customers including Florida resident Estella Lopez and Los Angeles resident Andrea Luquetta.

Lopez said she incurred $204 of overdraft fees on seven debit card purchases in August 2009, but would have incurred just one $34 fee had the bank posted her transactions from lowest to highest.

Luquetta accused the bank of posting a $1,725 automatic bill payment five days early in August 2009, causing her to incur $231 of overdraft fees on seven debit card purchases. She said she should have incurred at most just one $33 fee.

In afternoon trading, JPMorgan shares were down 12 cents at $38.16 on the New York Stock Exchange.

The case is In re: Checking Account Overdraft Litigation, U.S. District Court, Southern District of Florida, No. 09-md-02036.

JPMorgan Agrees to Pay $110 Million in Overdraft Fee Case

JPMorgan Chase & Co., the biggest U.S. bank by assets, reached a preliminary agreement to pay $110 million to settle litigation saying it gouged customers on overdraft fees for checking accounts, court records show.

The settlement would resolve claims by customers including Andrea Luquetta of Los Angeles, who sued over fees charged to debit cards attached to her checking account. U.S. District Judge James Lawrence King in Miami must approve any settlement. King had earlier rejected arguments by various banks that customers were legally bound to arbitrate the dispute.

“We’re pleased to have reached an agreement in principle,” Patrick Linehan, a JPMorgan spokesman, said in an e-mailed statement.

The litigation before King involves more than 30 banks sued over their overdraft-fee policies. The customers say the banks reorder debit-card transactions in their computers to maximize overdraft fees. Bank of America Corp., the second-biggest U.S. bank by assets, agreed last year to pay $410 million without admitting liability to settle an overdraft lawsuit brought by its customers.

In her lawsuit, filed in 2009, Luquetta claimed JPMorgan engaged in “unfair, deceptive and unconscionable” assessment and collection of overdraft fees. Her complaint also refers to the practices of Washington Mutual Inc., which JPMorgan bought in 2008.

Insufficient Funds

Chase didn’t decline debit transactions when a customer had insufficient funds and didn’t warn them an overdraft fee would be charged, Luquetta alleged. Rather, Chase routinely charged customers overdraft fees of $25 to $35 for transactions of only a few dollars, according to the amended complaint.

Chase and Washington Mutual “either refused to allow their customers to opt out of overdraft protection, or failed to adequately disclose to their customers that they may do so,” according to the complaint, which sought to proceed as a class- action, or group, lawsuit.

“In many instances, these overdraft fees cost the banks’ account holders hundreds of dollars in a matter of days, or even hours, when they may be overdrawn by only a few dollars,” it claimed.

In September 2009, Chase announced several changes to its overdraft fees for debit cards.

It eliminated overdrafts unless a customer elects the service, modified the posting order of charges to recognize debit-card transactions and ATM withdrawals as they occur, ended fees for accounts overdrawn by $5 or less, and reduced the maximum number of fees per day to three from six.


Last September, King ruled that customers of SunTrust Banks Inc., M&T Bank Corp., Regions Financial Corp. and Branch Banking & Trust Co. can use the federal courts rather than arbitration to pursue overdraft claims. He said a U.S. Supreme Court ruling last April in AT&T Mobility LLC v. Concepcion didn’t require arbitration in every case.

In October, a federal appeals court ruled that King should consider the JPMorgan case in light of the Concepcion ruling. The judge, the appeals court ruled, should have limited the pretrial collection of evidence to “issues bearing significantly on the arbitrability of this dispute until the question of arbitrability has been decided.”

Bruce Rogow, a lead attorney for the JPMorgan Chase customers, wouldn’t comment on the accord. Another lead attorney, Robert Gilbert, didn’t return a phone call or e-mail seeking comment.

Largest Settlement

Bank of America’s settlement, finalized in November, is the largest thus far in the litigation. The accord won court approval despite objections the amount was too little for customers and lawyers were being paid too much.

Union Bank NA agreed to a $35 million settlement with customers in November; an Associated Banc-Corp. unit, Associated Bank, agreed in November to pay $13 million.

The case is In re Checking Account Overdraft Litigation, 09-md-02036, U.S. District Court, Southern District of Florida (Miami).