JPMorgan Chase is suing customers, who they say committed fraud by indulging in the viral social media phenomenon known as the "infinite money glitch." Customers of the global bank would deposit a check for a large sum of money at Chase ATMs and withdraw the funds before the check bounced.
What happened?
In 2024, this "glitch" was popularized on TikTok and then shared on other social media platforms, leading to large lines forming at Chase ATMs in places like New York. An August post about it on X was viewed 7.5 million times, according to Entpreneur.com.
Within days of the initial viral post, JPMorgan Chase fixed the error, locked accounts and authorized negative balances for participants. The bank says this TikTok trend was simply check fraud. By October 2024, the largest bank in the US began suing those who stole the largest amounts of money, which was between US$80,000 to US$300,000, according to Entrepreneur.com. These lawsuits were filed in federal courts.
In the last week, JPMorgan Chase sued more customers who allegedly stole money because of this trend. This time they went after those who took amounts less than US$75,000 and filed the lawsuits in state courts. Georgia, Miami, New York (Bronx) and Texas (two counties) are among those seeing these cases, according to CNBC.
In addition, JPMorgan Chase has sent letters to 1,000 customers insisting that they repay the funds they stole. Some people voluntarily returned the money when CNBC reported last year that the bank would take legal action.
The news outlet also reports that the bank is pushing back on those embroiled in this scandal who are trying to file for bankruptcy to clear debts and avoid paying back the funds. In addition, these lawsuits are separate from the investigations and potential charges law enforcement is pursuing.
"We're still investigating cases of fraud and cooperating with law enforcement - and we'll do that for as long as it takes to hold fraudsters accountable," according to a statement from Drew Pusateri, a spokesman for the New York-based bank and reported by CNBC.
What to consider when suing a customer
JPMorgan Chase is not the first, nor will it be the last, organization to sue customers. Still, filing a lawsuit against a customer should be a last resort after attempts at alternative solutions. By almost all accounts, JPMorgan Chase had no choice but to file lawsuits because alleged crimes were committed that resulted in loss. Letting this go because it was the result of some viral post obviously would set an awful precedent.
Some of the reasons companies might have to pursue legal avenues against customers are:
- Breach of contract
- Failed to pay for goods and services
- Engaged in other harmful or illegal activity
Before filing a lawsuit, companies can take other actions to avoid a showdown in court. After all, having to sue customers can have a chilling effect, draw negative attention and put the trust that a brand has built with others to the test.
Is a lawsuit worth it?
Considering the costs and determining whether it is worth it to take legal action is the first step. Some losses are too small to warrant the trouble of taking legal recourse.
Has everything been documented?
A lawsuit is only worth it if there is a good chance of winning. To win, those taking action must have proof and documentation of the alleged violations or crimes. In the case of JPMorgan Chase, they have the receipts in the form of documented transactions and the trail of the viral posts.
Have you tried negotiating?
In many instances, the company is owed money. Perhaps, the customer is withholding funds for a specific reason. In those cases, the company can try to negotiate to avoid bad publicity and the costs of legal action.
Have you communicated with the customer?
JPMorgan Chase sent 1,000 letters demanding reimbursement for the money that was taken because of these fraudulent checks. Before bringing a customer to court, ask for the money or talk about the action or behavior in question. Demand letters can be effective. In JPMorgan Chase's case, the mere threat of legal action as reported in CNBC resulted in some customers returning the funds.
Prep work is vital in the lead-up to a lawsuit. Grossmann Law Firm recommends reviewing any written contracts or terms and conditions, evaluating whether the brand is totally blameless, trying to reach an informal resolution, sending letters of demand, following up with clients, considering the implications of filing a lawsuit and assessing damage control.
Ultimately, the US' largest bank recently began pursuing more lawsuits to attain money from customers who allegedly committed fraud by profiting from the "infinite money glitch." The bank's crackdown is, by virtually all accounts, warranted. However, these lawsuits always put the trust between brands and consumers in a vulnerable place. Ideally, companies should seek legal action after trying to resolve issues in less intense and obtrusive ways. Avoiding lawsuits whenever possible is wise.
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