JP Morgan Chase Faces Lawsuit For Charging High Interest To Crypto Buyers Using Credit Cards

JP Morgan Chase has reportedly been sued for charging high fees and interest rates to customers using its credit cards to purchase cryptocurrencies.

The lawsuit was filed by one of the bank’s customers by the name Brady Tucker from Idaho who claims that the bank has been treating his cryptocurrency purchases through his credit card as cash advances. He filed the lawsuit at the federal courthouse in Manhattan on Tuesday and claims that the bank has been overcharging his credit card since January without any prior notice.

Cash advances are usually characterized by higher interest rates and instant charges compared to regular purchases. Tucker revealed that he has been incurring hefty interest rate charges as high as 30 percent as well as other additional fees despite the fact that he always settles his bank balances before the end of every billing cycle. He is currently pursuing class-action status for the lawsuit so that all the customers that have fallen victim to the bank's tactics can be repaid. Tucker is also pursuing damages worth $1 million.

Many banks and credit card companies had announced earlier this month that they would start charging cash advance fees to any cryptocurrency related purchases. Some had even announced that they would not allow their customers to purchase cryptocurrencies using credit cards. MasterCard and Visa were among the first to inform their customers that they would charge extra fees on top of the 4 percent that is charged to customers for every transaction carried out on crypto exchanges such as Coinabase. The extra charges included an additional 5 percent cash advance charge and extra interest rate that would start being counted from the moment the purchase was made.

Cryptocurrency buyers using Mastercard or Visa cards, therefore, end up being charged as a minimum of 10 percent before interest rates and as much as 30 percent after interest rates. These tactics were clearly used to discourage people from buying cryptocurrencies especially considering that the digital currency market has been viewed as a huge threat to fiat currencies. Unfortunately, there has been very few alternatives for traders meaning they have no other option but to soak up the extra charges, thus giving banks and credit card companies an opportunity to make more money.

The new lawsuit against JP Morgan Chase opens up the debate on whether cryptocurrency should be classified as currency or commodities. The IRS maintains that they should be taxed as property while other regulators are still uncertain.