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

* Largest U.S. bank reaches preliminary settlement

* More than 30 lenders sued over overdraft fees

* Bank of America $410 million settlement is largest so far

By Jonathan Stempel

Feb 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.

Comments

[kamact]

10:15 PM on 02/07/2012

A financial terrorist entity,...

[Scott Weiner]

04:00 PM on 02/07/2012

Chase is the worst. I went in to a Chase to cash an insurance check, which was a checking account at Chase and they refused to do it because I didn't have an account there even though the check was an account from Chase.. They were rude and obnoxious.

[krm1255]

03:26 PM on 02/07/2012

You KNOW that banks track the time of day a transaction occurs. They should be required to process transactions in the order in which they occur. Simple to solve.

[glitterik]

02:34 AM on 02/08/2012

Well, now they do. You have a lawyer to thank for it, to.

[Gabby Lopez]

01:40 PM on 02/07/2012

I'm in the EXACT situation!!! I got hit with three Chase overdraft fees on Monday morning. Two of the transactions were made on Friday and the last one (the largest amount) on Saturday. Chase processed the last transaction first so that I would be overdrawn and instead of paying one overdraft fee I got charged with THREE @ $37/each!!! To make matters worse, one of the transactions made on Friday was for a Redbox rental....$1.63 total cost. Chase added the $37 fee to "cover" that transaction. RIDICULOUS!!!!!! Any suggestions on how I can get these fees overturned?

[moneyevils]

12:38 PM on 02/08/2012

Hi... I had that same situation. I rented a red box video on a friday. On Tuesday card was charged for 7 movies and TCF CHARGED ME 35.00 FOR EACH 1.00 PLUS TRANSACTIONS. I filled out paperwork..,. nothing ever done. Employer deposisted direct depoist. 600.00 plus dollars went to overdrafts resulting in no money left for me. Never resolved. What these banks and even credit unions have done the same to my kids.... wow.... keep your mattress money or go to wallmart cash your payroll and pay the 3.00.

Let me know if you get any help and if som how far back can you go?

Carol.. MPLS,MN

[Kenz300]

12:40 PM on 02/07/2012

Credit unions are local and treat their customers well.

It might be time to move your money.

[Janet Logan]

10:03 AM on 02/07/2012

Has anybody ever had a good story to tell about their bank? Not for a couple of decades now, when people had to go into the bank not stand in front of an ATM.

HBOS, my bank, decided a couple of years ago that calculating overdraft percentages was too difficult for the average punter. So they changed it from 1% of the overdrawn sum to £1 per day for any sum overdrawn from £1 up to £500. A very nice little earner for them.

Same bank also gave me a free overdraft which for many years I very rarely used. Then one day I had occasion to wire money overseas. Some idiot added a 0 to 200 Euros and I was instantly without funds. The only way around it, they said, was to change my overdraft facility to accommodate it until they could refund me. Oh, and that free overdraft? Gone in the same instant, never to be returned.

Such grasping liars, the whole boiling of them.

[Janet Logan]

09:55 AM on 02/07/2012

There is absolutely nothing a bank likes more than a well-stacked deck. Time to shuffle that pack.

[CCR4]

09:15 AM on 02/07/2012

Overdraft fees are only paid by those who are habitually irresponsible in managing their accounts. I over drafted my account ONE TIME in my 10+ years with BofA because I thought money was in one account when it was really in another and I called BofA and they refunded my $105 in overdraft fees immediately no problem.
I'm sick of all these bank lawsuits that do nothing but reward those who are irresponsible at the expense of those who do manage their accounts responsibly. All they do is lead to higher banking fees, credit card annual fees, higher interest rates, restrict access to credit, etc for everyone.

[Carol Anne Peschke]

05:42 PM on 02/07/2012

Bull! Routinely processing withdrawals before deposits and processing the largest withdrawals first is a deliberate scheme to cheat responsible customers out of fees that are too high even for irresponsible ones. The big banks have been doing this for decades, and the amount they'll end up paying back is merely a drop in the bucket.

[Bunny007]

08:48 AM on 02/07/2012

The Fed's goal?? Devalue the dollar by 33%

http://www.forbes.com/sites/charleskadlec/2012/02/06/the-federal-reserves-explicit-goal-devalue-the-dollar-33/2/

Why isn't OWS millions strong in every city across this country?? Our country is being looted from the inside out.

[suddenfun]

09:21 AM on 02/07/2012

I know, people are not nearly pissed off enough yet,

[hoxsie454]

08:31 AM on 02/07/2012

The article states that JPMorgan will no "end debit card overdrafts unless customers ask for them". Why would a KNOWING customer tell the bank they wished to pay overdraft fees???

[Carol Anne Peschke]

05:45 PM on 02/07/2012

If someone is desperate for cash, he/she might agree to pay an overdraft fee. It's basically a legal form of loansharking.

[Paul Sta]

08:30 AM on 02/07/2012

Can I get the same deal??, i'd like to rob a bank of a measly 10 million dollars, and pay a fine of about 100,000.

[Charles Deihl]

02:16 PM on 02/07/2012

Banks that wrongfully Foreclosed on People are trying to pay $1,000-$2,000 on Homes that were worth 10 times more then that & the Homeowners are out of their Homes and their investments.So in my eyes if a Person Robbs a Bank,they are only Robbing from the Robber.

[JimMichie]

08:03 AM on 02/07/2012

These banksters consider these "settlement fines" simply as a cost of doing business. Chump change to them as they continue their crimes against America!

[RonK Michigan]

07:44 AM on 02/07/2012

YEARS ago, I moved my accounts from the fee-crazy National City Bank (now also, long ago bankrupt and gone - LOL) to a one branch Mom 'n Pop bank. They actually refund foreign bank ATM fees......They know me by sight (Same small-town as with National City where I.D. was required to make a deposit)........
NEVER happier with any other bank before.
You ALL should do the same

GINGRICH/ROMNEY
NONE AND DONE

Ronk’s Steven Wright Quote Du-Jour:
“If going to church makes you a Christian, then standing in a garage makes you a car”

[SweetWilliam]

07:38 AM on 02/07/2012

I imagine there will be no significant admission of liability. The fine will be less than the illegally-gained profits. The banks will continue to do the same damn thing.

[perpetualsanity]

07:18 AM on 02/07/2012

The banks started that practice of clearing larger debits first, instead of by the order of arrival because the projections were more $$$ in fees. Glad to know this practice caught up with them and the should be forced to pay restitution.

[Carol Anne Peschke]

05:47 PM on 02/07/2012

Whatever restitution they end up paying will be only a small fraction of what they've stolen.