SAN FRANCISCO (CN) – JPMorgan Chase Bank forces customers to pay “absurdly high” overdraft fees on debit cards in violation of a federal regulation that protects people from such fees, according to a class action in Federal Court. Congress passed Regulation E in November 2009; it requires bank customers to “opt in” before banks can charge them overdraft fees on debit transactions.
Chase, which claims that Regulation E will cost it $500 million a year, “is doing everything it possibly can to scare and mislead customers into opting-in to an abusive and unfair overdraft program, which causes significant harm to its most vulnerable customers, while resulting in massive profits for the bank,” according to the complaint.
The class claims Chase is aggressively pushing its customers to opt in, bombarding them with misleading ads that “create the impression that the customers’ debit card will simply stop working or experience significant problems in everyday usage if they do not opt-in to being charged overdraft fees.”
To bully customers into opting in to its overdraft program, the class says, Chase has altered its available-funds policy so that direct deposit funds are not available on the day the money is received – but only for customers who have not opted in.
“Chase is fully aware that many of its customers who live paycheck to paycheck need to have access to their funds on the day that they make deposits, such as direct pay checks from employers,” the class claims.
“However, Chase has changed its practice of making these funds available in order to create hardships for these customers … in order to coerce its customers into opting-in to the abusive overdraft program.”
Lead plaintiffs Victor Espinosa and Rhonda Closson both claim that Chase withheld money from their paychecks, and say they were not given notice that their money would no longer be available on the day it was deposited.
The class seeks restitution and punitive damages for breach of contract, conversion, fraud and unfair business practices, and an order prohibiting Chase from running deceptive ads about its overdraft program.
They are represented by David Wright with McCune Wright of Redlands.