J.P. Morgan Chase is following Bank of America’s lede to settle class action lawsuits for improper debit card overdraft fees.
“The case, brought in U.S. District Court for the Southern District of Florida, revolves around allegations that Chase and other banks manipulated the order in which they processed customers’ transactions to maximize the account overdraft fees paid by debit card customers,” wrote American Banker in disclosing the proposed settlement.
“Plaintiffs accused Chase and more than 30 other banks of processing customers’ debit card transactions in a way to wrongfully maximize overdraft fees. Specifically, the banks processed debit card transactions not in the order in which customers conducted them but instead from the highest-to-lowest transaction balances; the change allegedly caused customers to drain their accounts quickly and maximized the overdraft fees assessed against them.
“Chase made enormous profits from overdraft charges, much of it taken from Chase’s most vulnerable customers,” the class action claims. The bank generated $500 million a year in post-tax income from high-to-low re-sequencing, according to Chase’s own analysis. As cover for its actions, plaintiffs allege, Chase falsely maintained that it had chosen high-to-low processing because consumers requested it. The opposite was true — Chase logged almost 10,000 complaints monthly about its overdraft fees and re-sequencing, according to internal records of complaints.”
Bank of America last year agreed to pay more than $410 million to settle similar claims. Other banks are also agreeing to pay plaintiffs. We will see how much money customers receive and how much lawyers get.
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- Wells Fargo Found By Judge “gouging and profiteering,” Ordered To Repay $200 Million
- Consumers Can Be Hurt by Banks Increasing Transaction Speed
- Congressional Bill Would Crack Down On High Overdraft Fees
- Citi Changing Check Clearing Policy To Reduce Overdraft Charges