Ameriprise Cash Sweep Program Benefits Company at Customers’ Expense, Class Action Lawsuit Claims

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A proposed class action lawsuit alleges Ameriprise Financial, Inc. and three subsidiaries have breached their contractual duties to customers by failing to negotiate reasonable rates of interest for accountholders’ cash sweep deposits.

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The 28-page Ameriprise lawsuit explains that in a cash sweep program, a customer’s uninvested cash is “swept” each day into an account at one or more affiliated banks, where the deposit can earn interest for the accountholder. According to the suit, despite Ameriprise’s legal and contractual obligations to act in clients’ best interests, the financial services company has deposited uninvested funds with bank partners that pay “artificially and unreasonably low” interest rates to customers and significantly higher fees and interest to the defendants.

As a result, Ameriprise has generated substantial net interest income from its cash sweep program while “paying customers a pittance,” the case claims.

Per the complaint, Ameriprise assigns clients to one of two cash sweep programs—the Ameriprise Bank Insured Sweep Account or the Ameriprise Insured Money Market Account program—depending on the type of account they have. Under these programs, uninvested cash balances are automatically swept into interest-bearing accounts with Ameriprise’s bank partners on a daily basis, the filing says.

However, the class action lawsuit contends the company has deposited customers’ uninvested funds into bank accounts that yield very low rates of return. As the case tells it, from 2022 through at least April 2023, the “paltry” interest rates paid to clients in Ameriprise’s cash sweep programs were between 0.0 percent and approximately 0.3 percent—significantly lower rates than similar programs offered by other financial institutions, which yield rates as high as 5 percent, the suit charges.

In contrast, Ameriprise has gotten a “larger share of the spread” from its bank partners because customers have received such low rates, the complaint alleges.

“Had Ameriprise obtained reasonable rates for its customers like other brokerages, however, it would have earned less,” the filing shares. “Ameriprise put its financial interests ahead of that [sic] of its customers instead and was able to handsomely line its pockets with massive revenues.”

The lawsuit looks to represent anyone who had cash deposits or balances in the Ameriprise cash sweep program.

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