JPMorgan Chase Plans to Limit Payday Lenders' Fees

jpmorgan chase payday lending fees
Justin Sullivan/Getty Images
NEW YORK -- JPMorgan Chase said Wednesday that it will take steps to protect its customers from fees and other charges that payday lenders may slap on them.

The bank said it will limit the fees that customers are charged when they overdraft their accounts to make payments to payday lenders.

It will also "enhance communication and require additional training" for employees, to make it easier for customers to stop payments. The bank will also make it easier for customers to close their accounts even when there are pending charges, including payday lender payments.

Payday lenders are a controversial sliver of the financial system. They offer short-term loans, usually targeting the cash-strapped poor. They have high interest rates, making it hard for customers to repay the loans, and the spiral worsens when the payday lenders charge extra fees.

JPMorgan Chase & Co. (JPM) and other mainstream banks don't make so-called payday loans. But they do allow the payday lenders access to their customers. The New York Times reported last month that JPMorgan, Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) allow payday lenders to automatically withdraw money from customers' accounts, even in states where payday lending is banned. In some cases, the Times reported, the banks allow lenders to tap checking accounts even after the customers have begged for a reprieve.

Ryan McInerney, the bank's head of consumer banking, said in a statement that the bank intended to protect customers from "unfair and aggressive collections practices."

"Some customers agree to allow payday lenders or other billers to draw funds directly from their accounts, but they may not know some of the aggressive practices that can follow," he said.

After the Times story last month, CEO Jamie Dimon described his reaction while speaking at the annual investor conference: "This is terrible, we're going to fix it."

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James Jones

arragghh... I dont know if my previous comment worked or not - anyways- here is is again.... yes these legal loan sharks also charge fees here in the UK - although sites like dont (from personal experience). The funny thing about this story is that JP Morgan were the ones who started the financial crisis and here they are \'helping\' us against loan sharks... They are more of a whale than a shark

November 11 2013 at 5:40 AM Report abuse rate up rate down Reply

The big shark protects customers from the little shark? Something fishy here.

March 20 2013 at 10:40 PM Report abuse +1 rate up rate down Reply

Hmmmm, where does this compare with the $35.00 overdraft fee on am item paid by the bank in excess of $5.00. So let's say you od your account $10.00 and pay a $35.00 OD fee, and if you do not pay that within 5 days you get an additional $15.00 fee for extended overdraft. So that is a total of $50.00 in fees to the bank on an account overdrawn for $10.00 for 6 days. Hmmmmm at a payday lender you can get $600.00 for 15-20 days for a $50.00 fee. What is the better deal???? I am not for or against payday lenders, it is expensive, but when the banks act like they are going to stop the payday lender as a help to consumers I cry FOUL. They are just losing fees themselves if someone uses a payday lender to make ends meet that month.

March 20 2013 at 8:43 PM Report abuse rate up rate down Reply
1 reply to sassyspittfire's comment

It is illegal for you to OD your account in the first place. Consider it a fine.

March 21 2013 at 8:02 AM Report abuse rate up rate down Reply

These banksters own these institutions. They lie.

March 20 2013 at 6:53 PM Report abuse +1 rate up rate down Reply
Audrey De Jesus

Pay day lenders are crooks taking advantage of the poor people. I like to see them out of business.

March 20 2013 at 5:49 PM Report abuse rate up rate down Reply

Where do payday lenders get the money they loan? They are backed by loans from the big banks.

March 20 2013 at 5:14 PM Report abuse rate up rate down Reply
1 reply to Charle's comment
Audrey De Jesus

Pay day lenders are crooks.

March 20 2013 at 5:50 PM Report abuse rate up rate down Reply

payday lenders are legalized loan sharks...nothing more - nothing less

March 20 2013 at 4:18 PM Report abuse rate up rate down Reply

Payday lenders are no worse than credit cards if you borrow what you need and pay it back when due. Maybe it is not enough when you add in the charges, but its better than what you had before you went in the door. Borrowing more than you can repay on the due date is a miracle loan, like it will be a miracle you will be able to repay. bullpucky

March 20 2013 at 2:46 PM Report abuse rate up rate down Reply

Ha ha what a sad joke. Take a guess who is on the back end of a lot, if not most, of these payday lenders?

March 20 2013 at 2:09 PM Report abuse rate up rate down Reply