Court Certifies Class Action Case Against Chase

A federal judge has certified a class-action lawsuit against Chase Bank that alleges the company promised consumers permanent low interest rates on "check loans" and later forced them to make increased minimum payments or accept higher interest rates.  

U.S. District Court Judge Maxine M. Chesney certified the class and denied a motion by Chase to strike the complaint.

The plaintiffs in the case, which was filed in 2009, allege that they each had a Chase credit card that carried a minimum monthly payment of 2% of the outstanding balance, and that the card included a “credit card check” option which provided a loan with a fixed annual percentage rate (APR) until the balance is paid in full.

In November 2008, Chase advised some of the plaintiffs that it was raising the minimum monthly payment from 2% to 5% of the balance on their account. Others were not notified until June 2009.

The plaintiffs charge that Chase's intent was to forced the class members to accept higher APR loans or make a late payment a trigger a “penalty APR” as high as 29.99%.

The suit charges that Chase breached the “implied covenant of good faith and fair dealing implicit in the Cardmember Agreement.”

Chase had argued that the case should not be granted class action status because of differences in the form letters various plaintiffs received. But Judge Chesney disagreed and said the plaintiffs' situations were “materially similar.”

The court's finding defines the class as all persons who entered into a loan agreement with Chase, whereby Chase promised a fixed APR until the loan balance was paid in full and (I) whose minimum monthly payment was increased by Chase to 5% of the outstanding balance or (ii) who were notified by Chase of a minimum payment increase and subsequently closed their account or agreed to an alternative change in terms.