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Chase puts hurt on payday lenders

By Marcie Geffner · Bankrate.com
Sunday, April 14, 2013
Posted: 9 am ET

JPMorgan Chase & Co. is fed up with payday lenders and other billers who it says seek inappropriate payments from consumers bank accounts with Chase. In fact, so fed up that the bank is taking steps to try to protect its customers from these payment demands.

Ryan McInerney, CEO of consumer banking at Chase, explained in a statement that the bank looked at its policies and decided to make a number of changes.

"Some customers agree to allow payday lenders or other billers to draw funds directly from their accounts, but may not know some of the aggressive practices that can follow. Those practices include repeated attempts for payment that can result in multiple returned items. We don’t believe these practices are appropriate, and are making these changes to help protect customers from unfair and aggressive collections practices," McInerney said.

The first change is that Chase will charge customers only one returned item fee if a biller presents items that have been returned due to insufficient funds in the customer's account more than once in a 30-day period, even if the biller tries multiple times to collect.

"This change is intended to address payday lenders and others who present repeated payments to customers that are not in the spirit of their signed agreement with the customer," Chase said in a statement.

This change is scheduled to take effective by the end of May.

Chase also will make it easier for customers to close an account even if there are open pending charges, including payday lender charges.

"If we believe those pending charges are inappropriate, we won't honor them," the bank said.

Chase also said it is working proactively to identify potential misuse of the automated clearing house, or ACH, system by payday lenders or other companies and to report such practices to the National Automated Clearing House Association, or NACHA. Chase plans to work with NACHA to try to strengthen its policies to disallow excessive payment demands as well.

The bank also intends to implement enhanced communication and additional training with respect to an existing policy to always follow a customer's instructions to stop a payment, the bank said.

Do you use payday lenders? Will Chase's new policy help to protect consumers?

Follow me on Twitter: @marciegeff.

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7 Comments
John
November 14, 2013 at 6:32 pm

Chase looking out for consumers
Now that's funny!

Frank Leonette
September 24, 2013 at 10:10 am

Thanks very interesting blog!|

Bob
May 08, 2013 at 7:12 pm

It's funny that the first thing people do is atack the government! Pay day loans are for emergencies and not to live off of. If you borrow the money pay it back. Sometimes people forget that this is one of the reasons our economy stinks. It's not necessarily the government but those who think that everyone else owes them! AND WE DON"T. Having said that, we do need a new government for both parties.

glenda
April 22, 2013 at 7:20 pm

In Tx.,PayDay Lenders can legally charge a 5 hundred percent interest rate, on money they loan. Conservative Christian Gov. Rick Perry has taken a hundred thousand dollars from these people. Conservative Christian Lt. Gov. David Dewhurst has taken 200 thousand dollars from these people, and Christian Conservative Speaker of the House Joe Straus, has take 350 thousand dollars from these people. All this campaign money was taken by Republicans, who see nothing wrong with PayDay Lenders charging these obscene interest rates, on the poorest people in Tx. Talk about a pack of low life hypocrites!

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