January 25, 2010
-
News: Supreme Court Wants to Know Feds Opinion
JPMorgan Chase & Co. is being sued by some of its credit card customers who are yelling foul play. Apparently, back in 2006, the credit card magnet offered a balance transfer at 1.9 percent for accounts in good standing for the life of the balance of the transfer. However, Chase tried to pull a fast one by imposing a monthly fee and doubling the minimum payment due. Customers were outraged and began calling Chase only to have the company pressure the customers into accepting a higher interest rate in exchange for removing the fees and lowering the credit card's minimum payment due. In February 2009, New York attorneys filed a class action lawsuit against Chase for changing the cards interest rates without prior notification.
On Monday, the U.S. Supreme Court asked the U.S. Government for their opinion in the class action lawsuit against Chase Bank, a subsidiary of JPMorgan Chase & Co. The credit card company challenged the previous court ruling which said the bank could be sued for changing the terms of the credit card's interest rates on accounts with late payments without prior notice. According to Chase attorneys, at the time of the incident, no federal law existed that required lenders to give prior notice of rate changes. Furthermore, Chase attorneys maintained that the terms and conditions of the balance transfer offered clearly stated that interest rates would go up if the customer defaulted.
JPMorgan Chase & Co. is the largest credit card issuer in the U.S. Most certainly, this case has the potential of rendering a landmark decision that will set a standard for years ahead. James McCoy, the lead plaintiff in the lawsuit claims that Chase violated the Trust in Lending Act by raising the interest rate. The Supreme Court justices petitioned the U.S. Solicitor General to give his opinion as to whether the court should consider Chase's stand. Although Federal rules did not specify that banks could not raise interest rates without prior notification in 2006, today, Federal rules would not allow it even it were specified in the contract.