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Chase to settle overdraft lawsuit

Chase is offering $110 million to settle a class-action lawsuit alleging it unfairly burdened customers with overdraft fees.

By MSN Money Partner Feb 6, 2012 6:17PM

This guest post comes from Willy Staley at MyBankTracker.


MyBankTracker on MSN MoneyJPMorgan 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:

Feb 7, 2012 5:30AM

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.

Feb 7, 2012 4:45AM
Isn't it about time the public told the banks what THEY are going to pay for the abuse they dared to call 'services'?  Its really absurd to accept anything offered by a bank as if THEY had the power to decide their penalty. What they OFFER will not make them squirm. Force them to pay 100 times that amount and that might make them pause before the next incident of abuse... More abuse WILL come just as soon as the public has forgotten the last abuse.
Feb 7, 2012 8:15AM
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.

Feb 6, 2012 7:36PM
So the bankster gets to keep the bulk of their illgotten gains and the little guys get to pay the bill.  Talk about fairness........If you think this is absurd, try to get a straight response when your mtge reaches 80% LTV and you try to get the PMI dropped.  Chase is a hemorrhoid on the world of finance.
Feb 7, 2012 5:09AM
Fu.k this ****, I totally agree who ever set this settlement. Ive been charged myself for the wrong overdraft fees and that's wrong.! I want all my money back that I paid! I hope Chase looses this settlement and all Chase bankers can get their money
Feb 7, 2012 7:26AM
Everyone withdraw money from them and go to small banks or credit unions
Feb 6, 2012 8:46PM
To the everyday customer this may appear to be an enormous amount of money, wait a minute, it was your money that they will pay back to you, not with interest, they will be very marginal with their donations that they give you and the federal government is right there in their pockets getting their share.  CHASE is just what the name implies, they chase you down to get a insignificant fee, but you must run a complete marathon to try and get $1 from them.  They are not in business to supply you, they are supplying themselves at your expense.  They are not giving you anything back that you haven't paid for, plus just like commercials, 30 days money back guaranteed, well they got interest on your money for 30 days, so any profit they made is not being penalized, thus they stay in business.  They need to be hit upside the head and really hurt their type of business before they learn.  In the interim time, your money is their best interest.  Time to form community co-ops on banking.  The muslims do this now and take care of their own.  Does anyone know of a community co-op in banking in Nevada, if you do, please post I am tired of CHASE and Bank of America.
Feb 7, 2012 11:03AM
As a former bank executive for Chase bank I know first hand that this common practice is not the only violation of ethics Chase does.  Chase bank on a daily basis, violates hundreds of federal laws to their advantages without any fear or regard for the rule of law or prosecution.  Jamie Dimon, CEO of Chase bank, he "earned" in excess of $30 million of stolen money in 2011 to benefit himself and a hand full of share holders.  Here is my hint to the federal government if they are listening, look into Chase's mortgage sales and refinancing practices.  You will find hundreds of violations that could rack up in Billions of Dollars of fines if not brought down the entire bank.
Feb 7, 2012 10:39AM

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...


Feb 7, 2012 7:50AM
And that's why I left Chase, too. Go get 'em boys! Where do I sign up to get in on this class action? I'd like my $140 back!
Feb 7, 2012 4:42AM
Banks have an entitlement issue. They operate in the ozone where reality means no one can operate without a bank. Well, folks... guess what? You CAN operate without a bank. I dare you to try it for a week and see how much money you will have saved yourself on fees for services you really never needed. Why do you need a bank to tell you how to access your money and how to SPEND it? Its really not very smart, is it? So, do the math and toss your bank in the trash where it belongs. Go off the radar for a while. You really will be shocked at how fresh the air gets...
Feb 7, 2012 11:11AM

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.

Feb 7, 2012 4:59AM
I had several accounts with Chase and closed them all for this very reason. They have an affiliation with my employer, but I have had too many complaints from my employees to suggest Chase let alone recommend them. The same goes for PNC.
Why do you think they call themselves CHASE? Because they will CHASE a dollar to the end of the earh and don't care who they hurt in the process. The Dollar is their GOD that they feed their customers to.
Feb 7, 2012 7:51AM

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?

Feb 7, 2012 11:16AM

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?

Feb 7, 2012 10:22AM
Is it just in Florida they are doing the law suit.  I'm in Louisiana and Chase bank did this to me all the time.  I complained about it to them-but they said that's just how it works.  They cost me a lot of money and they put me deeper in the hole than if if they would have charged just 1 charge.  I wonder why all the customers from Chase have not been notified about the lawsuit.  I closed my account there a year ago for that reason. 
Feb 7, 2012 4:56AM
surprise surprise, my bank back in cincy, CHASE, has been charging me for two years on a safe deposit box that i close back in 2010. they do not answer my emails they just take the money out of my account. I am trying to live overseas now  and they seem to think that there is little i can do.
Which seem to be the case
Feb 7, 2012 10:01AM
Chase is a bunch of tricksters.  They need to be redefined as a criminal organization and gone after on that basis.
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.

Feb 7, 2012 11:22AM
Capital One needs to be next for the very same reason
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