JP Morgan Chase Class Action Challenges Extended Overdraft Fees

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JP Morgan Chase Bank was hit with a class action lawsuit alleging the bank charges not only overdraft fees, but “extended overdraft fees” in violation of the National Bank Act.

Lead plaintiff Brandie Johnson alleges in her class action lawsuit that her account with Chase Bank was hit with an overdraft fee. In addition, the plaintiff says she was then hit with another fee five business days later because her account remained in a negative balance.

Johnson claims the so-called extended overdraft fee “constitutes interest for the use, forbearance, or detention of money.” Further, states the JP Morgan Chase class action “[t]he amount of interest charged far exceeds the permissible limit under the National Bank Act.”

According to the JP Morgan Chase class action lawsuit, a Chase Bank account holder would be assessed an extended overdraft fee of $15 in addition to a $34 fee per transaction for an overdraft of their bank account if they failed to replenish their account within five days of the overdraft.

The extended overdraft fee would also be assessed every five days that the account was at a negative balance, alleges the JP Morgan Chase lawsuit.

“Unlike an initial overdraft fee, the Extended Overdraft Fee is an additional charge to a customer for which Chase Bank has provided nothing new in the way of services,” alleges the complaint. “The charge is based solely on the alleged indebtedness to the bank remaining unpaid by the customer for a period of time.”

The JP Morgan Chase class action lawsuit alleges that although overdrafts are generally for small sums of money, $50 or less, the assessment of overdraft fees by banks have skyrocketed, making banks $32 billion in fees in 2012 alone.

“[A] bank’s exposure for carrying a customer’s overdraft is ordinarily very small and limited,” states the JP Morgan Chase Bank lawsuit. “But rather than charging legally permissible interest until its customer cures the overdraft balance, Chase Bank instead charges a purported Extended Overdraft Fee that in reality is interest at an illegal rate.”

The JP Morgan Bank class action points out that the U.S. Consumer Financial Protection Bureau has even launched an investigation into bank overdraft practices that potentially place account holders at risk.

Johnson further alleges that Chase Bank falsely represents the extended overdraft fee to account holders. The plaintiff says that Chase’s written materials regarding their checking and money market accounts do not disclose that the fee is an interest charge of extended credit. Rather, Chase Bank states that it will charge a “fee” or “interest for any overdraft,” the JP Morgan Chase Bank class action states.

The plaintiff seeks to represent a nationwide Class of Chase Bank checking and/or money market account holders who were charged extended overdraft fees. In addition to violating the National Bank Act, the plaintiff alleges that Chase Bank is in violation of California consumer protection laws.

Johnson is seeking actual and punitive damages as well as a court order stopping Chase Bank from assessing extended overdraft fees.

The plaintiff is represented by Jeffrey D. Kaliel of Kaliel PLLC.

The JP Morgan Chase Bank Overdraft Fee Class Action Lawsuit is Johnson v. JP Morgan Case Bank NA, Case No. 5:17-cv-02477, in the U.S. District Court for the Central District of California.