JPMorgan launches lawsuit against customers who stole thousands of dollars in 'infinite money error'

JP Morgan Chase Lawsuits have begun against customers who stole thousands of dollars from ATMs by taking advantage of a technical glitch that allowed them to withdraw funds before checks bounced.

The bank filed at least three federal court lawsuits on Monday targeting some of the people who made maximum withdrawals in the so-called infinite money issue 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 associate deposited a fake $335,000 check at an ATM, according to the bank.

“On August 29, 2024, a masked person deposited a check in the amount of $335,000 into the defendant's Chase Bank account,” the bank said in the Texas filing. “After the check was deposited, the defendant proceeded to withdraw the bulk of the ill-gotten funds.”

JPMorgan, the largest US bank by assets, is investigating thousands of potential cases of “infinite money errors” although it has not disclosed the scope of the associated losses. Despite the waning use of paper checks as a digital method of payment, they are still a major avenue for fraud, resulting in $26.6 billion in losses worldwide 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 in a financial institution. Videos began circulating in late August showing people celebrating cash withdrawals from Chase ATMs only after bad checks were deposited.

Typically, banks only make a fraction of the check's value available until it clears, which takes several days. JPMorgan said it closed the loophole days after it was discovered.

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 between about $80,000 and $141,000.

Most of the cases examined by the bank were for much smaller amounts, according to people with knowledge of the situation who declined to be identified to speak about the internal investigation.

In each case, JPMorgan says its security team reached out to the alleged fraudster, but it did not pay for the fake checks, in violation of the deposit agreement customers sign when they create an account at the bank.

JPMorgan is seeking restitution of the stolen funds with interest and overdraft fees, as well as attorneys' fees and, in some cases, punitive damages, according to the complaint.

The lawsuits are likely to be the start of a wave of lawsuits to force customers to pay their debts and signal broadly that the bank will not tolerate fraud, according to people familiar with the matter. JPMorgan prioritized cases with large dollar amounts and indications of possible ties to organized crime, they said.

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

“Fraud is a crime that affects everyone and erodes trust in the banking system,” JPMorgan spokesman Drew Pusateri said in a statement to CNBC. “We are pursuing these cases and actively cooperating with law enforcement to ensure that anyone who commits fraud against Chase and its customers is held accountable.”