Chase to refund $4.4 million in credit card fees
Posted
Mar 31 2009, 04:32 PM
by
Karen Datko
Rating:
This post comes from partner site ConsumerAffairs.com.
Chase Bank USA, the credit card-issuing subsidiary of JPMorgan Chase, has agreed to stop charging a $10-per-month service charge that it added to more than 184,000 credit card accounts of customers who transferred balances to Chase cards.
And, as the result of an investigation by New York Attorney General Andrew Cuomo, the company has refunded or will refund about $4.4 million charged to those consumers under a unilateral change in terms imposed in January.
Chase also faces at least one class-action lawsuit contesting the monthly charges.
U.S. consumers carry more than 100 million Chase credit cards. For a number of years, Chase has offered some of its cardholders very attractive promotional rates for balance transfers or other loan amounts placed on their Chase credit card accounts. The offers made clear that a one-time transaction fee, usually 3%, would be charged for the low promotional rate.
Despite the promises Chase made in its offer, Chase in November notified more than 300,000 consumers nationwide that the terms of the offer had been changed. Chase told its cardholders that it would start charging an additional flat fee in January -- a $10 service charge -- each month. That extra $120 per year in additional fees significantly raised the effective APR on those balances, in some cases more than doubling the effective interest rate.
Among those complaining to ConsumerAffairs.com was Peter of Los Angeles: "Transferred balances to Chase at a low rate. Made all payments on time and above minimum. Suddenly found myself paying $10/month service fee forever whether I carry a balance or not, with no notification (but try to prove that you did not get a letter!).
"The only explanation, 'We did not make enough money off you in the past, so we're making up for it,'" Peter said. "'You have a lifetime offer? Sorry, you just died!'"
Responding to consumer complaints, Cuomo's office contacted Chase in January and requested a meeting with representatives to address those concerns. Upon meeting with Chase, the attorney general's office demanded that Chase cancel the $10 monthly service charge and refund the money. On March 26, Chase agreed to comply.
"My office will not sit back and allow banks to promise one thing in its solicitations and agreements with consumers, and then when times get tough, change the deal, leaving consumers holding the bag, Cuomo said. "Truth-in-lending laws prohibit this very conduct. I am glad that Chase has now reconsidered its ill-advised, illegal decision, and will now live up to the terms it originally offered and agreed to."
Under the agreement, Chase will send letters to consumers nationwide telling them that as of April 1, Chase will no longer be charging them the $10 monthly service charge. In addition, Chase has refunded or will refund the service charges.
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