The largest bank of the United States, JPMorgan Chase has agreed to pay $2.5 million to settle a class-action lawsuit over its higher interest rates and extra fees charged from crypto transactions, according to the Reuters report. A lawsuit was filed in Manhattan federal court in 2018 that accused the bank of charging surprise fees when it stopped letting customers buy crypto with credit cards and, instead, treated their purchases as cash advances. One of the plaintiffs complained that the bank charged him extra fees and higher interest on the cash advances than on the credit cards.
JPMorgan Chase blocked credit-card purchases of cryptocurrency.
According to the lawsuit, several banks, including JPMorgan, decided to block credit-card purchases of digital currencies on venues around the world in 2018. One of the plaintiffs, Brady Tucker, claimed that when he was charged extra fees and higher interest on the crypto transaction, the bank refused to refund $160 in extra costs when he complained. JPMorgan was dismissive of complaints surrounding its approach towards crypto transactions, noting that clients can use their debit cards to avoid incurring cash advance charges. The bank has now agreed to settle the class-action lawsuit with $2.5 million.
Visa and Mastercard are also accused of forcing banks to treat crypto transactions as cash advances.
JPMorgan Chase is not the only bank to charge extra fees and higher interest rates on crypto transactions. Credit card giants Visa and Mastercard were also accused of changing the merchant classification code of several crypto exchanges, forcing banks to treat card purchases on some exchanges as cash advances. Several banks have already backed away from crypto as they fear that allowing purchases using borrowed money could leave them on the hook if the buyers’ bets go wrong and fail to repay their debts. Credit transactions can also create big headaches for financial institutions if stolen cards are used to buy untraceable crypto. However, since the pandemic began, people are more inclined to use digital currencies as a mode of payment as it requires no physical contact.
Earlier, JPMorgan Chase had released a report saying that the US has the most to lose from the potential surge of cryptocurrencies.