February 12, 2010
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News: Cardholders Sue JPMorgan Chase
Just days after New York's States Attorney General Andrew Cuomo took aim at the nation's largest credit card issuer, Bank of America (BofA), JP Morgan Chase & Co. faces a trip to the courtroom as well. A former credit cardholder has filed a lawsuit against JPMorgan Chase & Co. claiming the nation's second largest bank unfairly and illegally raised his interest rate. Barry Woldman filed a class action suit in a U.S. District Court in Chicago representing cardholders who claim they opted out of an interest rate increase by closing their credit card accounts and Chase proceeded to raise the rate.
The lawsuit stems from a notification that Chase sent cardholders notifying them of an interest rate increase. Customers were given the option of opting out on the increase provided they closed their credit card account. According to Woldman, he opted out of the interest rate increase and closed his account in October but Chase still raised the 11.99 percent interest rate on his card balances to 17.99 percent the very next month. For Woldman, the increase is devastating considering he owes nearly $16,000 on his account. The lawsuit is demanding that Chase honor the "opt out" contract and pay credit cardholders compensatory damages.
JPMorgan Chase & Co. was not the only credit card company to raise interest rates to head off new legislation that will ban lenders from such arbitrary increases. Every major bank raised interest rates ahead of the new law that comes into effect on February 22nd. The new law will prohibit banks from raising interest rates on card balances unless the cardholder is 60 days or more late with his/her payment. JPMorgan Chase & Co. is based out of New York and traded on the New York Stock Exchange under the symbol "JPM". A spokesperson for the bank said the company has no comment at this time. The case is set to be heard in court on April 9th.