JP Morgan Slapped With Lawsuit for Charging Extra Fees on Cryptocurrency Purchases
JP Morgan Chase has been slapped with a lawsuit for charging unexpected fees following its ban on cryptocurrency purchases through its credit cards.
The plaintiff is accusing the company of treating cryptocurrency purchases as cash advances and charging an interest rate on them. The suit filed by an Idaho customer is intended to be part of a wider class action suit against the company.
The suit says JP Morgan charged substantially higher interest rates and fees on the cash advances and refused to make refunds after the customer complained.
The plaintiff Brady Tucker is seeking $1 million in statutory damages. Brady alleges he was charged $143.30 in fees and $20.61 in interest. This represents an annual interest rate of 30%.
Several other JP Morgan Chase customers were most likely hit by the charges, Tucker claims. He claims he had been previously making cryptocurrency purchases using his credit from Coinbase and other exchanges without incurring any charges.
“Chase silently smacked them with instant-cash-advance fees, plus much higher interest rates than normal, and left them without any recourse,” he says in the suit filed in a Manhattan District court.
Chase Bank “stuck the plaintiff with the bill, after the fact of his transactions, and insisted that he pay it,” the suit reads in part.
JP Morgan has so far not made any statement regarding the lawsuit.
Credit Risk Fears
JP Morgan Chase stopped credit card purchases of cryptocurrencies on February 3 after a sharp plunge in prices as concerns about credit risk mounted. Several other banks also took similar action. They include Lloyds Banking Group, Citigroup and Virgin Money.
According to the suit, the charges are in violation of the US Truth in Lending requiring credit card issuers to notify its customers directly in writing of any significant changes in terms.
The act is designed to promote the informed use of credit. It requires disclosures about terms and cost to help standardize costs and help in calculating costs associated with borrowing.
The act also provides a way of resolving billing disputes.
On February 2, 2018, the value of Bitcoin had slipped to as low as $8000 from nearly $20,000 in mid-December 2017 as panic selling took toll on the market. The downward trend has persisted ever since as regulatory pressure continues. Bitcoin is currently struggling to stay above $7000.