Finance

JPMorgan begins suing customers over ‘infinite money glitch’

Published

1 week ago

October 28, 2024

Business Finance News

The Chase bank logo above ATMs, taken in Manhattan.

Michael Kappeler | Picture Alliance | Getty Images

JPMorgan Chase has begun suing customers who allegedly stole thousands of dollars from ATMs by taking advantage of a technical glitch that allowed them to withdraw funds before a check bounced.

The bank on Monday filed lawsuits in at least three federal courts, taking aim at some of the people who withdrew the highest amounts in the so-called infinite money glitch that went viral on TikTok and other social media platforms in late August.

A Houston case involves a man who owes JPMorgan $290,939.47 after an unidentified accomplice deposited a counterfeit $335,000 check at an ATM, according to the bank.

“On August 29, 2024, a masked man deposited a check in Defendant’s Chase bank account in the amount of $335,000,” the bank said in the Texas filing. “After the check was deposited, Defendant began withdrawing the vast majority of the ill-gotten funds.”

JPMorgan, the biggest U.S. bank by assets, is investigating thousands of possible cases related to the “infinite money glitch,” though it hasn’t disclosed the scope of associated losses. Despite the waning use of paper checks as digital forms of payment gain popularity, they’re still a major avenue for fraud, resulting in $26.6 billion in losses globally last year, according to Nasdaq’s Global Financial Crime Report.

The infinite money glitch episode highlights the risk that social media can amplify vulnerabilities discovered at a financial institution. Videos began circulating in late August showing people celebrating the withdrawal of wads of cash from Chase ATMs shortly after bad checks were deposited.

Normally, banks only make available a fraction of the value of a check until it clears, which takes several days. JPMorgan says it closed the loophole a few days after it was discovered.

Miami and California

The other lawsuits filed Monday are in courts including Miami and the Central District of California, and involve cases where JPMorgan says customers owe the bank sums ranging from about $80,000 to $141,000.

Most cases being examined by the bank are for far smaller amounts, according to people with knowledge of the situation who declined to be identified speaking about the internal investigation.

In each case, JPMorgan says its security team reached out to the alleged fraudster, but it hasn’t been repaid for the phony checks, in violation of the deposit agreement that customers sign when creating an account with the bank.

JPMorgan is seeking the return of the stolen funds with interest and overdraft fees, as well as lawyers’ fees and, in some cases, punitive damages, according to the complaints.

Criminal cases?

The lawsuits are likely to be just the start of a wave of litigation meant to force customers to repay their debts and signal broadly that the bank won’t tolerate fraud, according to the people familiar. JPMorgan prioritized cases with large dollar amounts and indications of possible ties to organized crime, they said.

The civil cases are separate from potential criminal investigations; JPMorgan says it has also referred cases to law enforcement officials across the country.

“Fraud is a crime that impacts everyone and undermines trust in the banking system,” JPMorgan spokesman Drew Pusateri said in a statement to CNBC. “We’re pursuing these cases and actively cooperating with law enforcement to make sure if someone is committing fraud against Chase and its customers, they’re held accountable.”

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Finance

Stocks making the biggest moves after hours: ABNB, PINS, EXPE, RIVN

Published

11 mins ago

November 7, 2024

Business Finance News

Finance

Traders see good chance Fed cuts again in December, skips in January

Published

42 mins ago

November 7, 2024

Business Finance News

Federal Reserve Chair Jerome Powell speaks during a news conference following the Nov. 6-7, 2024, Federal Open Market Committee meeting at William McChesney Martin Jr. Federal Reserve Board Building in Washington, D.C., on Nov. 7, 2024.

Andrew Caballero-Reynolds | AFP | Getty Images

Expectations for a December interest rate cut remained strong after the Federal Reserve trimmed rates by a quarter percentage point in November, but market pricing is suggesting the likelihood of a “skip” in January.

On Thursday afternoon, the U.S. central bank lowered the federal funds rate, which determines what banks charge each other for overnight lending, to a target range of 4.5% to 4.75%.

Before the Fed released this decision at 2 p.m. ET, market pricing pointed toward a 67% chance of another quarter-point cut in December and a 33% chance of a pause that month, according to the CME FedWatch Tool.

The probability of a quarter-point December rate cut rose to more than 70% following the meeting, while the chances of a pause slipped to nearly 29%. Future rate probabilities found in the CME FedWatch Tool are derived from trading in 30-day fed funds futures contracts.

Meanwhile, the odds that the Federal Reserve would skip an interest rate cut in January was around 71%. This was slightly higher from 67% before the release of the Fed’s November decision on Thursday afternoon.

— CNBC’s Jeff Cox contributed to this report.

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Finance

DoubleLine’s Gundlach says expect higher rates if Republicans also win House

Published

1 hour ago

November 7, 2024

Business Finance News

Jeffrey Gundlach speaks at the 24th Annual Sohn Investment Conference in New York, May 6, 2019.

Adam Jeffery | CNBC

DoubleLine Capital CEO Jeffrey Gundlach said Thursday that interest rates could shoot higher if Republicans end up controlling the House, securing a governing trifecta that gives President-elect Donald Trump free rein to spend as he pleases.

Gundlach, a noted fixed-income investor whose firm manages over $96 billion, believes the higher government spending would require more borrowing through Treasury issuance, putting upward pressure on bond yields.

“If the House goes to Republicans, there’s going to be a lot of debt, there’s going to be higher interest rates at the long end, and it’ll be interesting to see how the Fed reacts to that,” Gundlach said on CNBC’s “Closing Bell.”

The race to control the House is undecided as of Thursday after Republicans clinched their new Senate majority. The Federal Reserve cut rates Thursday, and traders expect the central bank to cut again in December and several times in 2025.

Notable investors such as Gundlach have been voicing concerns about the challenging fiscal situation. Fiscal 2024 just ended with the government running a budget deficit in excess of $1.8 trillion, including more than $1.1 trillion dedicated solely to paying financing costs on the $36 trillion U.S. debt.

“Trump says he’s going to cut taxes … he’s very pro cyclical stimulus,” Gundlach said. “So it looks to me that there will be some pressure on interest rates, and particularly at the long end. I think that this election result is very, very consequential.”

If the Trump administration extends the 2017 tax cuts or introduces new reductions, it could add a significant amount to the nation’s debt in the next few years, worsening the already troublesome fiscal picture.

Still, Gundlach, who had predicted a recession in the U.S., said the Trump presidency makes such an economic downturn less likely.

“I do think that it’s right to see the Trump victory as being as reducing the odds for near-term recession fairly substantially,” Gundlach said. “Certainly, the odds of recession drop when you have this type of agenda being promoted in plain English for the past three months by Mr. Trump.”