JP Morgan, he largest U.S. Bank, has reached a preliminary settlement as one of over 30 lenders being sued for overdraft fees.
Read the full story from Reuters here.
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.
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