Chase Bank "Check Loan" Contract Litigation
Lieff Cabraser Heimann & Bernstein, LLP, with co-counsel, represents credit cardholders in a class action lawsuit charging that Chase Bank ("Chase") breached its contract with cardholders and violated the federal Truth In Lending Act and state consumer protection statutes by unilaterally modifying the terms of long-term fixed rate loans.
Background
For years, Chase has promoted the transfer of balances on loans held by other lenders, such as home equity loans, auto loans or other credit card balances, to their Chase credit card accounts. Chase offered to consolidate the debt into a "fixed" loan with terms that would apply "until the balance is paid off."
In addition to balance transfers, Chase offered to consolidate new debt through so-called credit card checks. With these checks, a Chase cardholder could purchase large ticket items, such as home furnishings or a family vacation, under the same basic terms, namely, a long term loan with terms fixed until the balance was paid off.
A typical offer presented the customer with two options:
- The customer could accept a 0% fixed rate for a specified period of time, such as one year. After that time, the Annual Percentage Rate (APR) on the loan would increase. Or,
- The customer could accept a loan with a higher APR, such as 3.99%, that is a "fixed APR until the balance is paid in full."
In other words, Chase proposed two methods of debt management, one for the short term, and one for the long term.
Plaintiffs and the members of the proposed Class are customers who selected Chase's long term debt management offer. They accepted Chase's offer to transfer the balances on loans held by other lenders to their Chase credit card accounts. In return, Chase consolidated the debt into a fixed, long term loan, the key terms of which would apply until the balance was paid off.
Plaintiffs' Factual Allegations
Having obtained Plaintiffs' and the Class members' business with the offer of a long term loan, starting in November 2008 Plaintiffs allege that Chase unilaterally changed the terms of loans by increasing the minimum monthly payment from 2% of the loan balance to 5% of the loan balance.
For example, a cardholder carrying a $20,000 balance on a long term fixed rate loan will see his or her required minimum monthly payment increase from $400 to $1000. As a result, cardholders were required to make a payment 2.5 times the minimum monthly payment under the original terms Chase offered.
If a cardholder failed to comply with the new terms, Plaintiffs allege that Chase demanded repayment of the full loan balance immediately or the cardholder agree to higher, variable APR. Chase also unilaterally imposed a $10 monthly charge on, which it apparently refunded in response to this litigation.
Plaintiffs charge that Chase used its superior position to breach its contracts and unlawfully deprive cardholders of the terms of the long term loans they had entered into with Chase.
The Court has not made any determination on the merits of Plaintiffs' allegations.
Proposed Class
The proposed Class consisted of:
All persons or entities in the United States who entered into a loan agreement with Chase, whereby Chase promised a fixed APR until the loan balance was paid in full, but who have been charged, or notified by Chase that they will be required to make monthly minimum payments of 5% of their outstanding loan balance.
Additionally, solely for the purpose of the Truth In Lending Act and certain state consumer protection statutes, the Class does not include business entities.
Contact Lieff Cabraser
Cardholders with Chase and other banks believe their credit card company has engaged in illegal, fraudulent or deceptive business practices are welcome to contact Lieff Cabraser. We wish to learn of your experiences with your bank or credit card company. There is no charge or obligation for our review of your claim.
About Lieff Cabraser
Lieff Cabraser is among the largest law firms in the United States that represents only plaintiffs. Described by The American Lawyer as "one of the nation's premiere plaintiffs firms," we enjoy a national reputation for professional integrity and the efficient and responsible prosecution of our clients' claims.
Since our founding thirty-five years ago, Lieff Cabraser has been committed to safeguarding the rights of consumers. Our firm has played a leading role in halting alleged illegal and deceptive business practices by leading banks and credit card companies.
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