Sunday, April 12, 2009

Class Action Lawsuit: Did Chase pull a credit card bait and switch?

Consumer advocate: 'I have never seen a credit card practice this abusive.' Usury is the Mind Control weapon of choice by top U.S. companies.

Until recently, Brian Woods of Akron, Ohio was a happy Chase Bank customer. Several years ago he accepted a promotional offer to use the bank’s “Lower than Prime” balance transfer checks to move high interest debt to his Chase credit card. The Chase solicitation promised: “No tricks. No gimmicks. Just savings.”

The offer was straightforward. Woods would pay a 3 percent transfer fee and get an amazingly low interest rate of 3.99 percent APR “until the balance is paid off.” Woods says he paid “on time, every time” in order to keep that interest rate.

Woods became an angry Chase customer when he received his January statement and saw a $10 “monthly service charge” had been added. The bank also bumped up his monthly minimum from 2 percent to 5 percent sending his payment from $140 to $300.

“I’ve seen banks do screwy things before, but this was the most blatant breach of contract I’ve seen a bank do,” he says.

Woods called Chase customer service and was told the bank would drop the monthly fee and return the minimum payment to 2 percent if he agreed to a new interest rate of 7.99 percent for a year. After that, he was told, the rate could go even higher.

“I said no, that’s blackmail, I’m not doing it,” Woods tells me. He got off the phone and contacted a lawyer.

This was not an isolated case. Last November, Chase notified about 400,000 people with these low interest cards their minimum monthly payment would more than double and a $10 monthly service fee would be added.

“I have never seen a credit card practice this abusive,” says Joe Ridout with Consumer Action, the San Francisco-based advocacy group. “The people who accepted this offer were those who really read the fine print. They understood the fine print. Then Chase went and erased the fine print and wrote some new fine print that was very advantageous to the bank and lets them gouge their cardholders.”

Class-action lawsuit filed

Earlier this year, Woods and another unhappy customer filed a class-action lawsuit against Chase. The suit claims Chase engages in “unlawful, unfair, and fraudulent business acts and practices.” It also alleges the bank violated the federal Truth-in-Lending Act.

What do I need to do?

If you are one of the Chase customers who had this happen to you, you don’t need to do anything right now. If the lawsuit is certified as a class action suit and there is a settlement, you will be notified by mail. The New York firm of Giskan, Solotaroff, Anderson and Stewart is handling this case.

The suit blasts Chase for “taking advantage of its customers, many of who are suffering extreme economic hardship by essentially ‘welching’ on its promise …”

All credit card issuers, including Chase, have provisions in their member agreements giving them the right to change the terms at anytime for any reason. The lawsuit argues this language does not allow Chase to change “the main terms” of the contract – a fixed rate for the life of the loan as long as you are a customer in good standing.

Attorney Jason Solotaroff who’s working on the class action lawsuit says his clients, Chase customers, were never told a fee could be added.

Why did Chase do this?
Chase will not comment on a pending lawsuit, but the company e-mailed me a statement. “Tens of millions of Chase customers have taken advantage of our promotional low rate financing over the last five years,” writes Stephanie Jackson, first vice president for public affairs.

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  1. N Char10:29 PM

    I took advantage of a very attractive offer made to me by Chase Credit Card Company. I borrowed approximately $35,000 locked below 5% interest. I have made all my payments on time. Paying the minimum payment with the majority of the money going on principal (because of the low interest rate) I have quickly reduced the loan to $28,000. Some months after baiting me with this extremely attractive offer Chase has told me they are changing the rules because they would like to have more interest on their money.
    Since I have paid on time, every time, they can’t raise my interest rate to their default rate, so they have decided to up my minimum monthly payment instead, from $560 to $1400. I guess what Chase is saying to me is “there is more than one way to skin a cat.” They have decided the easiest way to get more interest out of me is to force me into a default situation. If I can’t make the minimum payment of $1400 per month, my interest rate will go up substantially and thus providing them with the end result they desire.
    This goes beyond predatory lending and is nothing short of financial terrorism. I have worked hard for over 20 years to build good credit and pursue my American Dream. Now I am being put in a position of having my credit, my small business, my home and my dreams destroyed by a company my tax dollars bailed out!

  2. Anonymous5:04 PM

    Chase credit card company is completely immoral and unethical. My mom recently purchased a new car on a loan that she received from Chase. She has really good credit so they offered her a 2% apr. Well, just this week she was informed that her minimum payments were going to increase from 200.00 to 800.00!! They refused to lower it. This financial institution is completely unethical and punishes it's customers for being able to get low credit in the first place. Shame on you Chase! We are calling the toll free number provided.

  3. The two comments above from people I have never met reflect the views of my two chase bank protest blogs. I can vouch that they probably represent the view of thousands of other Chase Bank customers as well.

  4. What Chase Bank has done wrong is they have not allowed their customers the right to OPT OUT of the Change in Terms. If Chase Bank allowed their customers to OPT OUT, many would.

    This would then force Chase Bank to come up with incentive based programs to get people to pay off that debt faster. This would actually have been easy to do.

    One of the most logical approaches would have been to give people 6 months to pay down their bill as much as they want above and beyond the 2% minimum payment, then freeze that payment amount month after month until the debt was paid off.

    This would mean NO INCREASE in the monthly minimum payment for anybody, yet Chase Bank would immediately have started seeing a nice, gradual increase in the amount of money they received every month as compared to the remaining debt among these customers.

    I think there may be a conspiracy behind Chase Bank's actions.


  5. Anonymous1:55 PM

    Chase does not want you as their customer any longer! They will do anything to get rid of you! They don't care about their customer base, preferring you payoff and cancel your account! WHAT CAN WE DO ABOUT THIS ABUSIVE TREATMENT?

  6. Anonymous1:34 PM

    also abused by chase. me and my 74 yr old father. talk about blackmail, they doubled his monthly payment-and mine, and then told him they could lower it for him, as he can't afford it, but he would have to agree to a higher interest rate. when the life of the balance was supposed to be a low fixed rate. i can't get them to stop calling me, have sent letters, have called them, they won't accept a lower payment, and keep accruing these outrageous fees. they tell me a robot opens the mail, so i will never get an answer to my letters asking for a more reasonable rate. is this class action suit still going on? please help . they're destroying the american consumer.

  7. Anonymous7:28 PM

    The American people should demand prompt repayment of all tarp money, plus 29.9% interest. If banks can suddenly change their terms, why should the average American citizen be any different? The 7 billion in interest (per bank) could be sent out to all the tax-payers as a government stimulus.

  8. Anonymous2:54 PM


  9. I can understand and even condone charging default rates on high risk accounts or accounts that are thirty or more days late, but Chase seems to be cannibalising its reputation in the name of profit by attacking its cardholders who are protective of their credit score.

    The moment I realised my statement was late I called Chase and they were paid electronically within 48 hours. Apparently this constitutes behavior worthy of a $39.00 late fee AND a "default" APR rate of 22.24%. My credit score as of January 31, 2010 is 765 and I get a full report annually from all three major reporting agencies. All my accounts are listed "paid as agreed" with no thirty day late payments on record.

    In my opinion based on my personal experience, Chase Bank is predatory, arbitrarily and unwaveringly punitive, as well as fiscally reckless. They are killing the goose that lays the golden eggs.

  10. How devious and mind numbingly rotten is Chase Bank? Did you know that Chase Bank lobbied Congress so that they would NOT have to notify their customers who were bait and switched about a special 5 year pay down program at the low interest rate and the same 2% monthly minimum payment.

    Add in the HELOC controversy as well.

    Parallel Foreclosure
    Robots Against Chase

  11. Anonymous11:48 PM

    Chase bank sucks they were charging me late fees of 35$ a month when my payment was on time and then they added another 30$ a month trying to say I was over credit limit. I was paying on time and was not over the limit ! They are shady bastards !

  12. Anonymous8:33 PM

    Chase lossed 7 BILLION on a trade and nobody blinks- They put the screws to over a MILLION GREAT customers and pay $100 milion to settle the lawsuite? This is so wrong, they will not care about such a small amount, it is less that 50% of the transaction fees they charged their customers for this screwing.

    They should be refunding ALL of those transaction fees, plus any interest charges over the original agreement for the customers who were railroaded into a higher rate card to maintain a managable minimum payment. They should be FORCED to lower the minimum payment back to what it was for us poor saps who have managed to comtinue to make their payments at the higher rate, and they should have to pay 5 BILLION in damages. If they can afford 7 BILLION for somebodys bad day at the office, they should have to pay a similar amount for their deceptive and ABUSIVE practices.

  13. Anonymous2:34 PM

    Now, there ia a $100,000,000 settlement. Guess who gets the benefits of the settlement - that's right, $25,000,000 plus litigation fees of $1,500,000 goes to the lawyers. Each member of the class will get $25 possible plus a few dollars. Who screwed the class worse, Chase or the lawyers? The folks that had their minimum payments increased by 2 1/2 times after trying to make a responsible decision to reduce interest have now been screwed yet again. This is absolutely outrageous. It would be interesting to figure out how much additional business the class counsel does with Chase.