When Checks Bounce, Chase Bank Cashes In on ‘Junk Fees’, Lawsuit Alleges

Have you ever been hit with a bank fee for trying to cash a check that didn’t clear? Well a group of Chase customers are suing the bank for just that. 

The five customers have accused the banking giant of charging them a fee for checks they could not have possibly known would not clear, the new lawsuit says. While someone might know if their own check won’t clear, there’s no way for the person trying to cash to know, they say. By charging that person a fee between $5 and $30, Chase is being “unfair, oppressive, and against public policy,” the lawsuit claims.

Unfair targeting, customers say

The five Chase customers who filed the proposed class action lawsuit in New York argue that by charging “Deposited Item Returned Fees,” JP Morgan Chase has “unfairly targeted its customers with financial penalties for faulty checks the customers had no hand in issuing.” The five plaintiffs were all charged $12 fees by the bank for attempting to cash checks that bounced, and all of them argue that was for reasons out of their control. 

“By charging its customers significant fees in situations where the customer did nothing wrong and could not have avoided the fee through reasonable diligence, Chase acted in a manner that is unfair, oppressive, and against public policy,” the lawsuit says.

Recent guidance from the Consumer Financial Protection Bureau supports the customers, with the agency saying the fees “cause substantial monetary injury for each returned item, which consumers cannot reasonably avoid because they lack information about and control over whether a check will clear.” Chase even changed its policy to fit with the CFPB guidance, Law360 reports.

Bank fees in the limelight

It’s well known that banks charge a number of hidden fees that catch consumers off guard. President Joe Biden even called for a crackdown on surprise fees in banking and other sectors late last year, saying they cost Americans tens of billions of dollars a year, Reuters reported. 

"Research shows that without realizing it, folks can end up paying as much as 20 percent more because of hidden junk fees than they would have paid if they could see the full price up front and compare it with other options. It's wrong," Biden said. He proposed that banks must disclose mandatory fees up front and that they cannot charge excessive fees for basic information, such as account balances. 

A CFPB advisory opinion from late 2023 said banks and credit unions cannot charge excessive fees for customers wanting to check balances or find out balances left on loans, and the bureau angered banks earlier in the same year proposing the industry cut credit card late fees, Reuters reported.

California has already changed its laws to “expressly prohibit ‘junk fees’ where a business reveals unavoidable fees later in the buying process,” according to the lawsuit. California Attorney General Rob Bonta said in a press release: “These deceptive fees prevent us from knowing how much we will be charged at the outset. They are bad for consumers … [and] cost Americans tens of billions of dollars each year.”

Banks have faced a plethora of lawsuits over fees

Chase isn’t alone in being targeted by customers for hidden or unfair fees, with major players like Bank of America, TD Bank, and many others also having to front up to allegations of unfair practices. 

Last year, Bank of America had to pay more than $250 million after allegedly opening fake accounts, withholding credit card rewards, and illegally charged junk fees, Forbes reported. The banks also allegedly charged customers with insufficient funds multiple overdraft fees on the same transaction. Back in 2011, Bank of America has had to payout $410 million to around one million customers who accused the bank of charging excessive overdraft fees. 

Meanwhile TD Bank also had to pay out millions for charging multiple overdraft fees on the same transaction. Also last year, Wells Fargo agreed to pay $35 million for allegedly overcharging $26 million in advisory fees to 11,000 accounts. 

Check that checking (and savings) account

Although it’s hard to avoid hidden fees imposed by banks, it is always worth checking your account and following up with your bank regarding any unknown payments. If you think you’ve been charged an unfair “junk” fee by JP Morgan Chase, you might be able to join the proposed class action lawsuit, which is for customers across the country. 

The five plaintiffs are suing for violations of New York General Business Law, Illinois Consumer Fraud And Deceptive Business Practices Act, New Jersey Consumer Fraud Act, California Consumer Legal Remedies Act and Unfair Competition Law, and unjust enrichment. They are asking for damages, restitution, and injunctive relief.

The plaintiffs and the proposed class are represented by Lisa R. Considine, David J. DiSabato, and Oren Faircloth of Siri & Glimstad LLP.

The Chase Bank Returned Check Fees class action lawsuit is Maslowski et al v. JPMorgan Chase Bank, National Association, Case No. 7:24-cv-01277, in the U.S. District Court for the Southern District of New York.