Major U.S. Banks Accused of Colluding to Keep Loan Interest Rates Artificially High

Case Overview: The lawsuit accuses seven major U.S. banks of collluding to drive up loan and credit card interest rates for consumers and small businesses.

Consumers Affected: Borrowers with variable-rate loans, credit cards, or credit lines tied to the WSJ Prime Rate since October 2021.

Court: U.S. District Court for the District of Connecticut

Seven of the nation’s largest banks, including JPMorgan Chase, Bank of America, Wells Fargo, Citibank, U.S. Bank, PNC, and Truist, are running a decades-long conspiracy to fix and stabilize interest rates on trillions of dollars in loans tied to the Wall Street Journal’s U.S. Prime Rate, according to a new lawsuit.

The complaint, filed as a proposed class action, claims the banks secretly coordinated to keep their “prime rates”, the benchmark rate for their most creditworthy borrowers, artificially high. 

Because the Wall Street Journal publishes a single “consensus” prime rate used to set the terms of most variable-rate credit cards, home equity lines of credit, and small-business loans, the alleged collusion would have inflated borrowing costs for millions of Americans.

Plaintiffs Say Prime Rate Collusion Raised Borrowing Costs Nationwide

Colorado resident Tracy Normandin and California resident J. Allen Sensabaugh brought the case, saying they’ve paid inflated interest rates on loans pegged to the WSJ Prime Rate. 

Normandin took out a home equity line of credit from Bank of America in 2023, while Sensabaugh has a Citibank consumer credit card tied to the same index.

Both say the rates on their accounts rose in lockstep with the WSJ Prime Rate, suggesting, they argue, that competition among major banks had effectively vanished. The lawsuit claims that coordination among the banks has caused them, and millions of others, to overpay interest for years.

Lawsuit Traces Coordination Back to Wall Street Journal’s “Consensus” Rate

Before 1992, the Wall Street Journal published a range of prime rates based on surveys of major banks. That practice allowed lenders to compete openly for borrowers. 

But when the Journal switched to publishing a single consensus rate, the figure used today, competition all but disappeared, the lawsuit claims.

According to the filing, within weeks of the change, the spread between the Federal Reserve’s benchmark rate and the WSJ Prime Rate jumped and then flatlined.

For more than 30 years, the lawsuit says, that spread has remained at roughly three percentage points, regardless of market shifts, an implausible outcome in a competitive environment. 

The plaintiffs allege the banks have continued to coordinate, keeping rates high and borrowers paying more.

Financial Sector Faces Rising Antitrust Scrutiny

The case comes amid a wave of antitrust and consumer lawsuits targeting financial institutions and credit networks.

Visa has faced multiple lawsuits accusing it of inflating debit-card processing fees and using restrictive contracts to stifle competition. The company has already paid billions in settlements related to similar claims involving ATM and “swipe” fees.

Meanwhile, a separate lawsuit seeks to block the proposed merger between Capital One and Discover, arguing it would reduce competition and lead to higher costs and fewer rewards for consumers.

Normandin and Sensabaugh aim to represent all individuals and businesses that made payments on loans or credit cards indexed to the WSJ Prime Rate since October 2021. 

They’re asking the court to order the banks to repay excess interest charges, impose triple damages under federal antitrust law, and force the banks to surrender profits gained through the alleged conspiracy. 

Case Details

• Lawsuit: Normandin, et al. v. JPMorgan Chase Bank, N.A., et al.
• Case Number: 3:25-cv-01749
• Court: U.S. District Court for the District of Connecticut 

Plaintiffs' Attorneys

• Peter Cherepanov, Patrick McGahan, Michael Srodoski, Erin Dennehy, Carmen Medici, Patrick Rodriguez, Karin E. Garvey, and Matthew Perez (Scott+Scott Attorneys at Law LLP)

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