JPMorgan Chase, the country’s largest bank, is taking steps to help those victimized by online payday lenders, reports the New York Times.
The practice is now illegal in 15 states, but not in Minnesota. MinnPost is running a series on the rapid growth in payday loans in the state called “Lending Trap.”
The online lenders use loopholes in the law to offer short-term loans with interest rates as high as 500 percent. And while the loans don’t come through the big banks, like JPMorgan, the lenders have been able to automatically tap into borrowers’ bank accounts, to get repayment.
After much criticism, JPMorgan is announcing today that it “will give customers whose bank accounts are tapped by the online payday lenders more power to halt withdrawals and close their accounts,” the Times reports.
And JPMorgan will also “limit the fees it charges customers when the withdrawals set off penalties for returned payments or insufficient funds,” the story said.
Wells Fargo and Bank of America said they are not changing their policies, but the story says they often follow JPMorgan on such changes.
