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Friday, February 6, 2009

San Francisco Welcomes Chase Bank (With a Lawsuit)

Posted By on Fri, Feb 6, 2009 at 10:00 AM

click to enlarge chase_thumb_240x159.jpg

Chase Bank will soon storm into the Golden State, taking over more than 700 WaMu branches by the end of March. Yet with all the contrarian spirit of the Left Coast, San Francisco is greeting the New York company with a big fat lawsuit.

 

Bay Area resident Diane Rooney and Riverside County man Michael Moore (not to be confused with the documentary filmmaker) filed a class action complaint in San Francisco federal court last week alleging that Chase Bank USA illegally changed the terms of "blank check" loans for its credit card holders. Chase is the credit card brand of JPMorgan Chase & Co.

 

According to the suit, Chase offered its credit card customers separate loans by sending them "blank checks," loans typically not to exceed their credit card limit, which promise lower interest rates -- from 2.99 percent to 4.99 percent APR -- than credit card debt. Customers were allegedly promised the lower rate would stay in effect "for the life of the loan."

 

Yet beginning in November, , the suit states, the bank notified customers that their check loans would now carry an additional monthly "Service Charge-Finance Charge" and the minimum monthly payment would be raised from 2 to 5 percent.


As if we needed one more reason to hate this country's banks right now.

 

"It looks to me they're trying to generate a lot of revenue to come in greater amounts sooner," says Michael Sobol, the attorney on the case from San Francisco firm Lieff, Cabraser, Heimann & Bernstein. "It strikes me as a pretty heavy-handed instance of a company exercising its superior market power and changing the terms on people at variance with terms under which they took on the loan -- and we think that's unfair."

 

Sobol said the case was well positioned to become a class action suit to include all Chase credit card customers offered the loans. Chase representatives denied to comment on pending litigation.

 

Welcome to California, indeed.

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Lauren Smiley

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