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JPMorgan Chase Balance Used to Determine Overdrafts Reg E Class Action

Before a financial institution can charge customers overdraft fees on one-time debit card and ATM transactions, it must fulfill the requirements of Regulation E. The complaint for this class action alleges that JPMorgan Chase Bank, NA and JPMorgan Chase & Co. do not fulfill these requirements because their disclosures do not make clear which account balance they use to determine overdrafts.

Regulation E requires that financial institutions give customers a “complete, accurate, clear, and easily understandable disclosure” about their overdraft services.

The complaint alleges that Chase’s disclosure document does not tell customers “that Chase uses an internal artificial account balance to determine if a debit card or ATM transaction will be considered overdrawn…” that is, the available balance. In fact, the complaint claims, the language used implies that Chase uses the actual balance.

The complaint gives an example of how this makes a difference: A person must make a number of payments at the end of the month. On the 27th, he has $1,000 in his account. He authorizes $800 to be paid for rent on the first of the month, then $200 for his car payment on the third. But on that same day, the 27th, he receives a water bill for $40 that he must pay immediately or be charged a late fee. He pays it. How many overdrafts does he have?

If the bank uses the available balance, it will count the $800 in rent and $200 car payment as already gone from the account. The available balance will thus be zero, and the $40 water payment will overdraw the account. In fact, he may be charged overdraft fees for all three transactions, because the $200 hold means there’s not enough for the $800 rent either.

If the bank uses the actual balance, it will not count the rent money as gone until the first of the month or the car payment as gone until the third. With this method, the person can add another $40 to the account before the first, in which case no overdraft will occur. If he doesn’t add another $40, then only the final $200 payment will incur an overdraft fee.

While financial institutions may choose which balance they use to determine overdrafts, the complaint claims they must make the choice clear to customers before they opt in.

Two classes have been defined for this action:

  • The Regulation E Class is all customers who have or have had accounts with Chase or who were assessed an overdraft fee on a one-time debit card or ATM transaction, between December 6, 2020 and the date the class is certified in this case.
  • The UCL, Section 17200 Class is all customers who have or have had accounts with Chase or who were assessed an overdraft fee on a one-time debit card or ATM transaction, between December 6, 2017 and the date the class is certified in this case.
Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

JPMorgan Chase Balance Used to Determine Overdrafts Reg E Complaint

December 6, 2021

Before a financial institution can charge customers overdraft fees on one-time debit card and ATM transactions, it must fulfill the requirements of Regulation E. The complaint for this class action alleges that JPMorgan Chase Bank, NA and JPMorgan Chase & Co. do not fulfill these requirements because their disclosures do not make clear which account balance they use to determine overdrafts.

JPMorgan Chase Balance Used to Determine Overdrafts Reg E Complaint

Case Event History

JPMorgan Chase Balance Used to Determine Overdrafts Reg E Complaint

December 6, 2021

Before a financial institution can charge customers overdraft fees on one-time debit card and ATM transactions, it must fulfill the requirements of Regulation E. The complaint for this class action alleges that JPMorgan Chase Bank, NA and JPMorgan Chase & Co. do not fulfill these requirements because their disclosures do not make clear which account balance they use to determine overdrafts.

JPMorgan Chase Balance Used to Determine Overdrafts Reg E Complaint
Tags: Did Not Make/Receive Proper Disclosures, Overdraft Fees, Regulation E