Banks continue to get it on the chin. After unexpected trading losses in billions, Libor rate manipulations, and irregularities in credit card swipes, here is the latest on another dispute hanging fire in the banking space.
JPMorgan Chase & Co. (NYSE:JPM) who had been sued for unlawfully boosting their minimum monthly credit card payments, has agreed to settle the three-year old class action lawsuit by paying off $100 million, which is about 45 percent of the fees of $220 million it earned as upfront charges for promotional credit card loans.
The bank had been accused of persuading customers to transfer card balances from other lenders, and thereafter consolidate these balances into fixed-rate loans. The trouble started when the bank bumped up the minimum loan monthly payment in some cases from 2 percent to 5 percent, leading customers to incur fines for late payments, or face high penalty rates.
In another area related to credit cards, JPMorgan Chase & Co. (NYSE:JPM) is also involved with Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) in a $6.5 billion settlement relating to claims by merchants alleging hidden swiping fees. Today Wal-Mart Stores, Inc. (NYSE:WMT) followed Target Corporation (NYSE:TGT) in panning the settlement, saying the proposed deal “would not structurally change the broken market, or prohibit credit-card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year.”
Investigations on the manipulations by banks of the Libor are continuing.