Yahoo Finance JPMorgan (JPM) Faces Suit for Violating Consumer Protection Laws
A class-action lawsuit has been filed by five customers against JPMorgan JPM, claiming that the bank charged unconscionable fees for unintentionally depositing checks that bounced.
Per the suit filed in the White Plains, New York federal court, JPM charged customers up to $30 for a “deposited item return fee” after checks they tried to deposit bounced for no fault of theirs.
It must be noted that there can be many reasons for a check to bounce. But when a check bounces due to insufficient funds or some other problem, it is not the fault of the person who tried to deposit the check.
JPM’s customers called the bank’s “junk fees” for returned checks “predatory.” The customers cited an October 2022 U.S. Consumer Financial Protection Bureau (“CFPB”) bulletin that said that indiscriminately charging such fees was likely illegal.
The complaint stated, “By charging these deposited item return fees, Chase unfairly targeted its customers with financial penalties for faulty checks the customers had no hand in issuing. They did nothing wrong, yet were penalized.”
The customers, who said that they were charged the junk fees between November 2021 and October 2022, are seeking at least $5 million in damages from JPM.
While JPMorgan declined to comment on the lawsuit, it said that it stopped charging these fees in December 2022.
Over the past six months, JPM shares have gained 22.8% compared with the industry’s 21.7% growth.
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Currently, JPM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Last October, the Federal Trade Commission proposed a new rule to completely prohibit businesses from charging junk fees, which are hidden and bogus fees that can harm consumers and undercut honest businesses.
The rule requires businesses to disclose all fees and the full price of goods and services upfront, allowing the FTC to impose penalties on those that do not comply.
Over the past year, many banks in the United States, including Bank of America BAC and Wells Fargo WFC, have been fined for charging customers junk fees.
In July 2023, the CFPB ordered BAC to pay more than $250 million over claims that the bank opened fake accounts, withheld credit card rewards and illegally charged junk fees.
Per the Office of the Comptroller of the Currency, Bank of America illegally double-dipped on fees for customers with insufficient funds in their accounts.
Likewise, in August, WFC agreed to pay $35 million to resolve regulators’ claims that the bank overcharged 11,000 accounts more than $26 million in advisory fees.
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