Chase Bank settles credit card class action lawsuit
STOLL BERNE, along with other class counsel, settled a class action lawsuit regarding promotional offers from Chase Bank USA, N.A. ("Chase") that promised a low interest rate for the life of the loan or until paid off. The case settled on a nationwide basis for $100 million.
Chase credit card customers alleged in the complaint that they were offered balance transfer loans or loans in the form of blank checks that were connected to but with different terms than the credit cards. The Plaintiffs also claimed that the promotional rate loans offered by Chase had terms that were at low interest rates usually with APR's or interest rates set at 2.99% or 3.99% "for the life of the loan." Chase used the promise of these low fixed rates for the life of the loan to induce consumers to transfer their balances from other credit card accounts to a Chase account. Most people paid a substantial balance transfer fee to Chase to lock in the promotional rates for as long as there was a balance remaining on the transferred amounts.
In November 2008, Chase sent its customers a notice stating that the minimum monthly payments would go up by 150%, from 2% of the balance to 5% of the balance. The notice of change in terms sent by Chase also added a new finance charge misleadingly described as an "Account Service Charge of $10 per month." This new account finance charge effectively increases the customers' interest rates even more.
The case settled for $100 million in December, 2012, and received final approval from Judge Maxine Chesney in February 2013. Checks should be mailed out in the Spring of 2013. In addition to compensating class members, the case addressed the significant issue of how credit card companies exercise their 'contractual discretion' to alter the terms of their customers' agreements. In the future, this discretion should not be used to undermine previous promises made to consumers.