Bank to pay USD 2.5 million to settle class action over cryptocurrency credit card fees
- 8 June 2020
ORX News story of the month: May 2020
Each month, we share a free operational risk loss event story from ORX News. The story is handpicked by the team as one of the most interesting stories reported by the service in the previous month. This story was published by the service in May 2020.
JPMorgan to pay USD 2.5 million to settle class action over cryptocurrency credit card fees
In May 2020, JPMorgan Chase agreed to pay $2.5m to settle a class action suit over credit card fees it charged customers who bought cryptocurrency using their Chase credit card.
JPMorgan Chase was one of several banks to announce in February 2018 that they would no longer allow their credit cards to be used to purchase cryptocurrency following a sharp plunge in the price of several leading cryptocurrencies and concerns over fraud.
The lawsuit was filed in April 2018 by a plaintiff who claimed that over a period of ten days beginning in January 2018, the bank switched from processing his credit card cryptocurrency payments as purchases to processing them as cash advances. By February 2018, the plaintiff had been charged more than $160 in cash-advance feeds and interest charges but had not been given notice of the change. In the suit, it was alleged that Chase had breached regulations by not giving customers 45 days written notice before effecting any change to account terms.
Chase argued that the changes it made had violated federal consumer protection laws. Chase contended that cryptocurrency purchases fall under the header of “cash-like transactions” that credit agreements would count as cash advances.
Following negotiations, Chase agreed to pay $2.5m which they estimated to constitute more than 95 per cent of the damages sustained by the class members. Chase has denied any wrongdoing.
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Extract of the data for this story from ORX News:
Business line: Retail Banking
Event type: Clients, Products & Business Practices
Loss amount: USD 2,500,000.00
Country: United States
Scenario category: Improper Business Practice