Borrowers sue major US banks over alleged prime rate-fixing scheme

By Mike Scarcella

Oct 17 (Reuters) - JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC) and other major banks are facing a new lawsuit alleging they conspired to fix the U.S. prime interest rate for more than 30 years, causing consumers and small businesses to pay inflated borrowing costs. The proposed class action, filed on Thursday in federal court in Connecticut, claims that eight large banks have coordinated since at least 1994 to set their prime lending rates to match a benchmark published by The Wall Street Journal as the "WSJ Prime Rate" that is set at exactly 3 percentage points above the federal funds rate.

The WSJ Prime Rate serves as a benchmark for trillions of dollars in consumer and small-business loans, including credit cards and home equity lines of credit, according to the lawsuit.

The two consumer plaintiffs, who are seeking to represent an estimated class of hundreds of thousands of borrowers nationwide, claim they paid artificially inflated interest on loans indexed to the WSJ Prime Rate. The lawsuit said that about 70% of all consumer loans for amounts under $1 million are indexed to the rate.

"This alleged conspiracy impacts millions of hard-working consumers pursuing the American Dream to own a home or need a small-business loan," Patrick McGahan, a lawyer for the plaintiffs, said in a statement.

JPMorgan (JPM), Bank of America Wells Fargo and other defendants including Citibank and U.S. Bank either declined to comment or did not immediately respond to a request for one.

The Wall Street Journal and its publisher Dow Jones are not named as defendants in the lawsuit. Dow Jones did not immediately respond to a request for comment.

Up until 1992, according to the complaint, the Journal published a range of prime rates, including the lowest and highest rates from large banks, which the lawsuit said fostered competition among banks. The WSJ Prime is now a single number, derived from a group of banks.

The lawsuit disputes public statements from the banks that they independently set their own prime rate based on a number of factors.

"Despite publicly stating otherwise, defendants' reported prime rates are the product of an agreement to fix rates," the lawsuit said.

The lawsuit claims that years of data showing near-perfect alignment in prime rate pricing among the banks makes it "impossible" they were acting independently.

The case is Normandin et al v. JPMorgan Chase Bank N.A. et al, U.S. District Court, District of Connecticut, No. 3:25-cv-01749.

For plaintiffs: Patrick McGahan, Carmen Medici and Karin Garvey of Scott + Scott

For defendants: No appearances yet

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