October 21, 2009
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News: Capital One Sued For Raising Rates
In the wake of massive complaints and outrage over the credit card industry's predatory and in most minds, criminal acts against consumers, four Americans are fighting back. An Atlanta attorney, E. Adam Webb of the Webb, Klase & Lemond law firm has filed a suit against Capital One Bank on behalf of Navy Lt. Commander Kevin S. Barker, Florida resident Eric W. Baxter, Massachusetts resident Michael A. Gaffney and Kansas resident Rebekah L. Kautz. The suit alleges that Capital One acted without cause when the company arbitrarily increased rates which double, tripled, or quadrupled credit card interest rates. Additionally, the new interest rate not only applied to new purchases, but was retroactive on existing balances as well. The cardholder was given an opt-out option but in doing so, the account would be shut down to further use. According to the suit, Capital One made the decision to raise interest rates on credit card accounts that were current and in good standing.
Webb began his battle against the abusive practices of credit card companies last year after the stock market hit bottom. On behalf of their clients, the law firm lodged numerous complaints with banks and lenders asking for restitution of unjustified over-draft fees and penalties. In an attempt to recoup losses from record breaking credit card defaults, banks and lenders began implementing large over-draft fees that have been called unfairly calculated through posting practices of posting from largest to the smallest transaction. The practice throws the account into an over-draft situation and assesses large penalties to small transactions that could have easily been paid.
A multidistrict complaint in Florida's Southern District Federal Count is also taking the challenge and alleges unjustified over-draft practices by several of the nation's credit card giants including JPMorgan Chase, Bank of America Corp, Citibank, and Wachovia. Last year Bank of America settled litigation in California regarding the subject of over-draft fees and has set aside $35 million to fulfill their side of the agreement. Capital One admitted to no wrong doing when settling the dispute. In spite of the outcome in the California suit, Webb noted that Capital One made no changes to their over-draft policies and has continued to with the abusive practices.