JPMorgan sues customers for check fraud after exploiting viral ATM glitch

JPMorgan Chase on Monday launched a string of lawsuits against customers accusing the company of exploiting a technical flaw that went viral on TikTok to extract thousands of dollars.

The issue in late August allowed customers to deposit large checks at ATMs and withdraw funds before the checks cleared, even if the checks later bounced.

The nation's largest lender has filed two complaints in Houston, Miami and Los Angeles, accusing two individuals and two businesses of illegally embezzling more than $661,000.

In the largest case, JPMorgan said a Houston man still owes $290,939.47 after a masked man cashed most of the $335,000 check deposited into his account on Aug. 29 over two days. The bank said the check was bounced on September 4

The defendants did not respond, receive or could not immediately be reached with messages seeking comment Monday.

Civil suits do not preclude or end the possibility of any criminal charges.

All four lawsuits accuse the defendants of breaching their deposit agreements and seek the return of wrongfully withdrawn funds and other expenses.

JPMorgan, based in New York, said it was following the cases and cooperating with law enforcement to hold people accountable.

“Fraud is a crime that affects everyone and erodes confidence in the banking system,” JPMorgan spokesman Drew Pusateri said in a statement.

Check fraud is a federal crime. Many banks, including JPMorgan, allow customers to access some of the value of their checks until the checks clear.

Last month, the Wall Street Journal reported that the bank was investigating thousands of possible check fraud cases.

Paper checks are no longer accepted in most European countries. For example, the UK and the Netherlands abolished them two decades ago.

Yet they remain a popular method of payment in the United States despite the increased use of digital technologies such as ApplePay.

According to Nasdaq's Global Financial Crime Report, the checks caused $26.6 billion in losses worldwide last year.