The Chase bank logo above ATMs, taken in Manhattan.
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JPMorgan Chase has begun suing customers who allegedly stole thousands of dollars from ATMs by exploiting a technical flaw that allowed them to withdraw money before a check cleared.
The bank filed lawsuits in at least three federal courts on Monday, targeting some of the people who withdrew the highest amounts in the so-called infinity money glitch that went viral on TikTok and other social media platforms in late August.
A case in Houston involves a man who owes JPMorgan $290,939.47 after an unknown accomplice deposited a forged check for $335,000 at an ATM, according to the bank.
“On August 29, 2024, a masked man deposited a check in the amount of $335,000 into defendant’s Chase bank account,” the bank’s Texas filing states. “After the check was deposited, defendant began withdrawing the majority of the ill-gotten funds.”
JPMorgan, the largest U.S. bank by assets, is investigating thousands of possible cases related to the “infinite money glitch” but has not disclosed the extent of related losses. Although the use of paper checks as a digital form of payment is becoming increasingly popular, they are still a major avenue of fraud and resulted in $26.6 billion in losses worldwide last year, according to Nasdaq's Global Financial Crime Report.
The episode “Infinite Money Glitch” highlights the risk that social media can amplify vulnerabilities discovered at a financial institution. In late August, videos circulated showing people celebrating withdrawing wads of cash from Chase ATMs shortly after depositing bad checks.
Typically, banks only make a fraction of the value of a check available until it clears, which takes several days. JPMorgan said it closed the breach a few days after it was discovered.
Miami and California
The other lawsuits filed Monday are filed in courts in Miami and the Central District of California, among others, and involve cases in which customers owe the bank amounts ranging from about $80,000 to $141,000, according to JPMorgan.
Most of the cases investigated by the bank involve much smaller amounts, according to people with knowledge of the matter who did not want to be identified as part of the internal investigation.
JPMorgan said that in each case its security team contacted the suspected fraudster, but the counterfeit checks were not returned, a violation of the deposit agreement that customers sign when creating an account with the bank.
According to the lawsuits, JPMorgan is seeking the return of the stolen funds, plus interest and overdraft fees, as well as legal fees and, in some cases, punitive damages.
Criminal cases?
The lawsuits are likely to be just the beginning of a wave of lawsuits that will force customers to repay their debts and generally signal that the bank will not tolerate fraud, say people familiar with it. JPMorgan prioritized cases with high dollar amounts and evidence of possible ties to organized crime, it said.
The civil proceedings are separate from possible criminal investigations; JPMorgan said it also referred cases to law enforcement agencies across the country.
“Fraud is a crime that affects everyone and undermines trust in the banking system,” JPMorgan spokesman Drew Pusateri said in a statement to CNBC. “We are pursuing these cases and are actively working with law enforcement to ensure that anyone who defrauds Chase and its customers is held accountable.”
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