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The scrutiny of how banks and brokerages treated their customers during an era of high interest rates is heating up just as that era draws to a close.

Raymond James ( RJF ) and JPMorgan Chase ( JPM ) were hit with lawsuits in recent days by customers alleging they were shortchanged on the interest due from idle cash.

They are the latest of several such suits against wealth advisory units and brokers centering on the use of so-called cash sweep accounts that typically don’t pay much interest. Other cases target Wells Fargo ( WFC ), Morgan Stanley ( MS ), UBS ( UBS ), Ameriprise ( AMP ) and LPL Financial ( LPLA ).

It’s not just cash sweep accounts that have customers angry. A major credit card lender, Capital One ( COF ), also faces a class action lawsuit over customer complaints that it paid far below advertised for a high-interest savings account.

The complaints come at a time when the Federal Reserve still has its benchmark rate at 5.25% to 5.5%, a 23-year high. The central bank is expected to start cutting rates as early as next month, kicking off an easing cycle that could last into 2025 and 2026.

"A government money market pays about 5% and the federal funds rate is a little bit over 5% so the magnitude of possible damages on an industry-wide basis, even just in retirement accounts, is in the billions of dollars," said Robert Finkel, a senior partner with Wolf Popper LLP who represented customers in a class action suit filed against Morgan Stanley.

Regulators from the Securities and Exchange Commission are separately conducting investigations or inquiries of cash sweep practices at Wells Fargo and Morgan Stanley, according to recent filings from those banks, with Wells Fargo saying it was in “resolution discussions.”

Bank of America also disclosed a regulatory inquiry regarding "the rates paid on uninvested cash in investment advisory accounts that is swept into interest-paying bank deposits."

Developed as a way for banks and brokers to put their customers’ idle cash to work, sweep programs move excess customer cash balances overnight into a money market fund or some other higher-yielding product offered by a bank or affiliate bank.

Brokers and banks earn a spread or income on those funds and in return the customer who owns the cash is paid a preset rate of interest. It can be far smaller than the yield earned when a customer directly invests into a CD or money market fund.

In recent weeks both Morgan Stanley and Wells Fargo have both raised their cash sweep rates. Morgan Stanley raised its rate from 0.01% to 2% on advisory accounts with cash balances over $250,000.

The core complaint from customers who are upset about the sweep accounts is that the lenders and brokers are profiting to an unreasonable degree from their cash balances while the customers are getting paltry sums.

Chip MacDonald, a financial services attorney who advises on regulatory issues, said the fact that a brokerage client isn’t getting a market competitive rate isn't unusual as long as the firms are properly disclosing it. Same goes for any conflicts of interest.

“It seems to me, it's the absence of clear disclosure as to what a brokerage account involves and where the money is swept to or whether or not the customer is given a choice," is where legal or regulatory problems arise, MacDonald added.

Two years ago Charles Schwab ( SCHW ) paid $187 million to settle SEC charges after an agency investigation found undisclosed conflicts of interest and hidden customer fees when pushing idle cash into sweep accounts as part of the company's automated robo-adviser offering.

Even during the current period of higher interest rates, menial interest on cash sweeps can mean a lot for a big bank.

Wells Fargo, for instance, said during a July call with analysts that it expected a $350 million hit to its net interest income from raising its cash sweep rates across its wealth unit.

“It's more substantial than it has been historically,” said Wolf Popper’s Finkel. “So it makes for a better case,” he added.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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