NEW YORK — JPMorgan Chase agreed to pay $100 million to settle litigation by credit card customers who accused the largest U.S. bank of improperly boosting their minimum payments as a means to generate higher fees.
The class-action settlement resolves a three-year-old case stemming from Chase’s decision in late 2008 and 2009 to boost minimum monthly payments for thousands of cardholders to 5 percent of account balances from 2 percent.
It comes as JPMorgan, like many of its main rivals, addresses a wide range of litigation over its banking practices, such as whether it conspired to overcharge retailers on card transactions, or manipulated benchmark interest rates.
Cardholders claimed that JPMorgan had induced them to transfer balances from other lenders to Chase card accounts, where the bank would consolidate their debt into loans with “fixed” interest rates until balances were paid off.
But according to the cardholders, JPMorgan boosted minimum payments to force them to either accept higher rates to preserve the lower payment requirement, or to make more late payments, which would trigger more fees or a 29.99 percent penalty interest rate. JPMorgan was also accused of closing underperforming accounts.
In a Monday filing with the federal court in San Francisco, lawyers for the cardholders said the $100 million is 45 percent of the $220 million in upfront transaction fees that their clients paid for the promotional loans.
JPMorgan spokesman Paul Hartwick declined to comment. The bank had argued that the changes in loan terms was a sensible means to reduce risk amid uncertain economic conditions.
Regulators are also examining whether JPMorgan and more than one dozen rivals have tried to rig the London interbank offered rate.
