JPMorgan settles overdraft case for $110M

JPMorgan Chase & Co. has agreed to pay $110 million to settle consumer litigation accusing it of charging excessive overdraft fees.

The largest U.S. bank by assets joined Bank of America Corp. and several smaller lenders in settling their portion of the nationwide litigation over the fees, which are typically assessed when customers overdraw their checking accounts.

Consumers had accused more than 30 lenders of routinely processing transactions from largest to smallest rather than in chronological order.

This procedure can cause overdraft fees, typically $25 to $35, to pile up because account balances fall faster when larger transactions are processed first.

Critics say this disproportionately burdens customers with lower incomes and balances.

JPMorgan's settlement in principle was disclosed in a filing on Friday with the U.S. District Court in Miami.

The settlement requires negotiation of final documentation and approval by U.S. District Judge James Lawrence King.

JPMorgan spokesman Patrick Linehan said the Manhattan-based bank was pleased to settle in principle.

Robert Gilbert, a lawyer for the plaintiffs, did not immediately respond to requests for comment.

In September 2009, JPMorgan said it would henceforth post debit card transactions and ATM withdrawals as they occur, and end debit card overdrafts unless customers ask for them.

JPMorgan chief executive Jamie Dimon said in 2010 that some fees for customers, such as overdraft charges, had become "punitive," but fees would rise on other services.

The JPMorgan case was brought by customers including Florida resident Estella Lopez and Los Angeles resident Andrea Luquetta. Lopez said she incurred $204 of overdraft fees on seven debit card purchases in August 2009, but would have incurred just one $34 fee had the bank posted her transactions from lowest to highest.