LAWSUITS NEWS & LEGAL INFORMATION
$100M Preliminary Settlement in Chase Credit Card Class Action
New York, NY: JPMorgan Chase & Co. has reached a $100 million settlement of a credit card rate class action lawsuit in which is was accused of improperly increasing its credit card minimum payments as a means to generate higher fees.
Filed in 2009, the Chase credit card lawsuit ( re: Chase Bank USA NA "Check Loan"Contract Litigation, Case No. 9-md-2032, U.S. District Court, Northern District of California) alleged the bank decided in late 2008 and 2009 to boost minimum monthly payments for thousands of cardholders from 2 percent to 5 percent of account balances. Cardholders alleged that JPMorgan induced them to transfer credit card balances from other lenders to Chase card accounts, where the bank promised to consolidate their debt into loans with "fixed"interest rates until the balance were paid off.
However, the lawsuit claims JPMorgan increased minimum payments to force credit card holders to either accept higher rates in order to keep the lower payment, to make more late payments and trigger more fees or a 29.99% penalty interest rate, or to close underperforming accounts. This manipulation resulted in millions of dollars in additional fee income from thousands of new cardholders.
According to court documents, lawyers for the cardholders claim that the $100 million class action settlement is 45% of the $220 million in up-front transaction fees that their clients paid for the promotional loans. They called the class action lawsuit settlement an "excellent result"for cardholders, who would recover "a substantial portion of the transaction fees they paid."The Chase credit card class action lawsuit settlement awaits final court approval.
Published on Jul-30-12
Filed in 2009, the Chase credit card lawsuit ( re: Chase Bank USA NA "Check Loan"Contract Litigation, Case No. 9-md-2032, U.S. District Court, Northern District of California) alleged the bank decided in late 2008 and 2009 to boost minimum monthly payments for thousands of cardholders from 2 percent to 5 percent of account balances. Cardholders alleged that JPMorgan induced them to transfer credit card balances from other lenders to Chase card accounts, where the bank promised to consolidate their debt into loans with "fixed"interest rates until the balance were paid off.
However, the lawsuit claims JPMorgan increased minimum payments to force credit card holders to either accept higher rates in order to keep the lower payment, to make more late payments and trigger more fees or a 29.99% penalty interest rate, or to close underperforming accounts. This manipulation resulted in millions of dollars in additional fee income from thousands of new cardholders.
According to court documents, lawyers for the cardholders claim that the $100 million class action settlement is 45% of the $220 million in up-front transaction fees that their clients paid for the promotional loans. They called the class action lawsuit settlement an "excellent result"for cardholders, who would recover "a substantial portion of the transaction fees they paid."The Chase credit card class action lawsuit settlement awaits final court approval.
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