February 9,2009
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News: Chase Chased by Class Action.
Recent changes in credit card terms by the industry are sparking opposition from the public. The latest case involves the recent move of Chase Bank exercising shady changes that appear contrary to consumer expectations on low-interest credit card accounts. Although the change only affects one-half of one percent of its card holders, the numbers involved are large. They could be as high as 400,000 credit card accounts.
This latest class action was filed in January over ‘unrepresented' changes in terms by forcing low-interest credit card holders to choose between either having their guaranteed low interest rates hiked or else paying a $10 monthly fee to keep them low. It all started with a promotional offer marketed by Chase to draw new customers with low-interest balance transfers away from their competing credit card lenders. The promotion enticed consumers because of the savings they could appreciate with a low-interest account where terms were not subject to change. Now, this savings is being taken away. Chase even announced that there may be further changes next year.
This suit was filed in federal court in California, and alleges that credit card consumers were drawn into contracts that indicated no possibility of arbitrary APR increases or any other exceptions like monthly fees. Of course, defaults and missed payments were the standard exception but, this latest move even includes consumers who have done no wrong. To boot, the details appear to be deliberately shrouded when consumers call the bank to inquire about these changes. No explanation is given as to how these changes are being implemented nor why.
Credit card holders are only given three choices: 1) Pay the monthly fee; 2) Take the APR hike, or; 3) Opt out and close the account. So, the class action suit is based on violations of the Truth in Lending Act. This act requires that lenders clearly identify account terms and conditions at the beginning of the agreement. Since Chase did not hold to these standards, there exist violations in breach of contract and unfair competition.