Could affect thousands of cardholders
Yucca Valley, CA -- (SBWIRE) -- 08/20/2012 -- JP Morgan Chase & Co. may be looking at a $100 million payment to settle a class action suit initiated by its credit card customers. These customers alleged that the company improperly increased the minimum payments due on existing loan balances. If the tentative settlement is approved by US District Court Judge Maxine Chesney, it could affect thousands of cardholders who received “Change of Terms” notices during 2008 and 2009.
A group of JP Morgan Chase & Co. cardholders filed a class action lawsuit alleging that the bank acted improperly by raising the minimum monthly payments required on their existing balances.
This group of cardholders claimed that the company convinced them to transfer balances owed to other lenders to their Chase credit card accounts. The debt would be consolidated into loans with fixed interest rates that would be in effect until the balances were paid in full.
Chase is accused of raising the interest rate from 2% of the unpaid amounts to 5%. Other customers also allege that they were told they would either have to accept larger monthly minimum payments or higher interest rates to maintain the lower monthly payments. In addition, some cardholders alleged that JP Morgan Chase & Co wrongfully closed their credit card accounts.
The major complaint in the case against Chase is that the increase in the minimum monthly payment requirement violated the ‘implied covenant of fair dealing and good faith.’
All Chase cardholders who were impacted by the payment increase between November 2008 and June 2009 were automatically entered into the lawsuit.
The $100 million settlement represents 45% of the $220 million in transaction fees paid by cardholders for these promotional loans, according to the lawyers who represent the cardholders in the class action suit.
JP Morgan Chase & Co. denies that there was any wrongdoing and does not believe that they owe their customers any money.
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