JP Morgan settles consumer litigation for $110 million
JPMorgan's settlement in principle was disclosed in a filing on Friday with the US district court in Miami.<br /><br /> <br /><br />
JPMorgan Chase & Co has agreed to pay $110 million to settle consumer litigation accusing it of charging excessive overdraft fees.
The largest US 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 US district court in Miami.
The settlement requires negotiation of final documentation and approval by US 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.