Chase to settle overdraft lawsuit
Chase is offering $110 million to settle a class-action lawsuit alleging it unfairly burdened customers with overdraft fees.
This guest post comes from Willy Staley at MyBankTracker.
JPMorgan Chase wants to pay just $110 million to settle a class-action lawsuit related to allegedly unfair overdraft practices that earned the bank $500 million a year. American Banker reports the bank has filed a tentative agreement in the overdraft lawsuit with the U.S. District Court for the Southern District of Florida.
In late 2009, Miami-based law firm Alters, Boldt, Brown, Rash & Culmo filed a lawsuit on behalf of a large plaintiff class against 38 different banks alleging abusive practices in how banks calculate overdraft fees. Central to the complaint is the argument that banks process transactions in a sequence designed to maximize overdraft fees, rather than to reflect the actual chronology of debits and deposits.
American Banker reports that Chase earned $500 million a year by ordering debit charges from highest to lowest dollar amount. Because of this practice, some customers who had accidentally overdrawn their account would be charged repeatedly for overdraft instead of just once. (Chase, like many other banks, discontinued the practice in March due to consumer backlash.) Post continues below.
For example: Someone who has $550 in their checking account does $50 worth of grocery shopping and then spends $13 at a bar, $25 at a restaurant, and $5 at the pharmacy before cutting a $500 check for rent will be charged three overdraft fees once the bank re-orders the charges high to low. Instead of just bouncing her rent check, our imaginary bank customer will see her rent check clear -- and this is the heart of banks' argument in defense of the practice -- but she'll be charged $30 (the national average overdraft charge) three times for the smaller charges.
As we reported late last year, the Pew Charitable Trusts have been outspoken about their distaste for the practice, which banks claim they offer as a service to their customers, for whom larger purchases are likely more important than smaller ones. Consumers advocates and consumers tend to disagree.
Chase overdraft lawsuit
Chase's settlement is pending Judge Lawrence King's approval, reported American Banker. Last November, King approved Bank of America's $410 million settlement in the same class-action suit. Chase's settlement offer is substantially smaller, although American Banker notes that "one factor that likely worked in Chase's favor was a mandatory arbitration clause in its consumer contracts."
As per Regulation E of the Dodd Frank Act of 2010, banks must now allow customers to opt in to overdraft protection, instead of automatically enrolling them in the program. As a result, banks have raised their overdraft fees to compensate for lost revenue.
More on MyBankTracker and MSN Money:
This lawsuit is still short $390 million profited from the overdraft fees Adding insult to injury, Chase recieved over $48 billion in secret loans from The Fed Reserve during 2008-2009.
The $110 million to be paid is just a token jesture from a bank well protected by corporate masters of our goobermint. Too big to fail, too corrupt and protected to be believable.
The ABA (American Bankers Association) the most powerful lobbyist group still pulls the string on Capitol Hill.
Last November, King approved Bank of America's $410 million settlement in the same class-action suit.
Although BofA has stopped the practice they have not paid out any of the money. I think 3 mos is enough time for them to scrape up $410 million. They can just take it out of the CEO's personal account.
The simplest solution appears to be charging the President and vice-presidents of BOA and CHASE with felony theft by deception and letting them face a jury of their customers. Let's see how the real criminals like being held accountable for their actions and how fast restitution would be offered when big Daddy's neck is on the block...
What is wrong with this picture? If any one of us had figured out a way to cheat the bank out of their money (and some have) we would be arrested (and some are sitting in jail now for cheating them), jailed, charged with a felony and be forced to repay every single penny plus do time in jail. The banks on the other hand simply give back some of the money if a lawyer gets involved when they get caught and the only people still making out on the deal are the lawyer and the bank.
I would like to know why it's a crime if you or I cheat them but not when they cheat us. They will never stop cheating us as long as they can do so with impunity and paying back a small portion of their booty is NOT a penalty!
I say what's good for the goose is good for the gander.
I say from now on if someone gets caught robbing a bank the bank should have to have their lawyers file a law suit to sue for their money and then the thief should be made to pay back a small portion of their booty and all lawyer fees are paid out of the CEOs personal account.
I have never written a hot check so I could care less if the big banks charge the s%^t out of people. I have been with a credit union for 25 years with great service and low fee's. If you don't like the BIG BANK FEE'S then why do business whit them?
Chase Bank steals $500 Million a year, year after year, until they have stole Billions of Dollars from customers(victims).
And nobody goes to Jail?
After stealing Billions of dollars from hard working American's and Illegal aliens they agree to pay back $110 million?
Are you kidding me?
Which seem to be the case
My son suffered fraud perpetrated by them on a fixed rate loan. They arbitrarily raised the tax and insurance impound account a whopping $300+/month (this was a loan in which the entire PITI payment was less than $1000/month) while actually those costs not only didn't increase, the taxes decreased (the adjusted amount of the impounds per month should have gone DOWN about $50)...............causing him to become unable to pay the mortgage. He could get absolutely no help from anyone in their system (by design, apparently).
Then they offer to 'reinstate' his loan and repair the impound hold backs, and make it all better (except for his ruined credit report), but oh, they have to have some FEES for doing that. How much? They were not too sure, but it would be at least $5000 to start.
That's not business, that crime.
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