J.P. Morgan Chase has taken steps to help depositors who have taken out payday loans avoid the most financially costly parts of those loans.
The bank announced Tuesday that beginning at the end of May it will only charge a fee for insufficient funds the first time a check is presented in a 30-day period and not an additional fee for every time the check might be put through.
This is to lessen the costs of having a payday lender put a check through multiple times for a loan.
“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,” the bank said in the announcement.
The bank also announced it would start working to identify cases of abuse of the Automated Clearing House system for checks and said it would report such abuse to the National Automated Clearing House Association.
The bank said it will also step up educating the public and its own staff about its policy on stopping payments and make it easier for depositors to close their accounts even when they have pending payday loan payments.
“If we believe those pending charges are inappropriate, we won’t honor them,” the bank said in its announcement.
“We took a look at our policies and decided to make a number of changes,” said Ryan McInerney, CEO of consumer banking at Chase.
“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,” McInerney said
“Those practices include repeated attempts for payment that can result in multiple returned items,” he said. “We don’t believe these practices are appropriate, and are making these changes to help protect customers from unfair and aggressive collections practices.”
