Class Action Lawsuits Filed Against Credit Card Companies

BCS Alliance ^ | No published date | BCS Alliance

[TenthAmendmentChampion]

Below are summaries of class action lawsuits filed against major credit card banks. This is not a complete list, just a few samples.

First USA (which became BankOne which became Chase)-- A class action lawsuit was filed against First USA when it changed the due date so that some customers, accustomed to paying by a certain date each month, would be caught off guard. Many of them would send in their payments late, not realizing that their due date was a few days earlier than they thought. First USA charged customers $29 every time a payment was late. When two payments were received late, they increased the interest rate 10 full points. (First USA has been accused of this practice more than once.)

First USA once failed to send out monthly statements to many of its customers which, in turn, caused many customers to pay late or not at all that month. When customers began complaining about the $29.00 late fees assessed as a result, First USA claimed the mix up was a result of a computer glitch; however, they refused to remove the $29.00 late fees and give up the millions in extra revenue. Instead, they announced that they "had no duty to send out a statement each month" and it was just too bad for their customers.

Chase -- If you have a card issued by Chase, perhaps you noticed a ten cent rebate on on of your monthly statements several years ago. That generous refund was the result of a class action lawsuit filed against Chase for dubious billing practices (not posting your payment on the date received as required by federal law). You only got ten cents because the lawyers who filed the class action suit took a big chunk of the $22 million settlement as their fee. There was so little left that everyone got just ten cents. (Most class action lawsuits against credit card companies result in a windfall for the attorneys with very little left over for consumers.)

Providian -- The king of unscrupulous billing practices and immoral behavior, Providian is considered to be the baddest of the bad credit card companies. It got caught overbilling its customers and had to pay the largest judgment ever awarded against a credit card company, $300 million. They improperly assessed late fees and charged customers for products never ordered (e.g., credit insurance). Many visitors to this website reported that they received checks from the California Attorney General for as much as $200.00 as a refund for Providian's billing overcharges. Providian was also signing up its customers for credit insurance without their permission.

Home l Credit l Debt l Bankruptcy l Site map Advanta -- Settled a class action lawsuit by agreeing to pay $7.2 million to reimburse customers who were guaranteed a low rate, but were charged a higher rate.

Sears -- Paid $36 million to settle a lawsuit filed by customers who claimed their interest rates were raised after Sears promised it would not raise them.

Capital One -- Several recent class action lawsuits have been filed against Capital One and are still pending. This credit card company once had a good reputation. It led the way in offering the first low interest rate card on purchases, balance transfers and cash advances. It forced other issuers to lower their rates, too. But then Capital One customers started complaining that their payments, mailed in a full two weeks before they were due, were being marked as having been received late. And Capital One was charging them late fees and jacking up their interest rate as a result, which is why the lawsuits have been filed. One case that received wide media exposure involved a man who had emergency open heart surgery. Due to his illness, he mailed in his Capital One payment late one month. Actually, Capital One received it just one day late. When he called to explain what had happened, they coldly told him "too bad" and jacked up his interest rate from about 7% to 21%. (Of course, Capital One isn't alone in using this tactic -- Citibank, MBNA, Providian, First USA do this as well.)

Citibank -- Paid a $45 million settlement for improperly assessing late fees. Citibank is one of the banks that will definitely raise your interest rate to as high as 28% if any negative information appears on your credit file -- even if you have always paid them as agreed. And they won't change your rate back if you submit proof to them that the negative information on your credit report was in error.

MBNA -- Paid an $8 million settlement for improperly assessing late fees.

The above is by no means a complete list of lawsuits. As several banking regulators have stated publicly, "most credit card companies use sneaky tactics, but only a few are singled out for punishment."

[Hoffer Rand]

Ah, you should be ok, if you’re using their system to pay your bills. I use my bank account’s bill pay system. I set up a “payee” account for each company I do business with. When the “payee” account is set up, that’s when an address gets entered for where the money goes every time I pay a bill. I don’t go to any company’s website to pay that company’s bill. I do it all centrally from my bank account. Credit card companies know a lot of people (like me) do this, so they change billing addresses. If you aren’t paying attention, you can fall prey to it.

I learned about this from a story done by a local TV consumer protection reporter and started watching our CC statements. About 4 months later, Discover changed their billing address. We caught it before we paid the bill. We called Discover and asked how people who pay online were supposed to know they’d changed their address. They told us people were finding out when they “learned the hard way.”

[CSM]

When you play with snakes, don’t be surprised when you get bit ping!

Thanks to Hoosier for the heads up.

Dave Ramsey Fan Ping List.

If you would like to be added to the “Live like no one else, so that you can LIVE like no one else” list, feel free to Freepmail me.

[CSM]

“Credit cards are a good thing and don’t forget it. Where else can you spend thousands of dollars and only pay back $45 a month? No one else.”

I wonder if every slave has the secret desire to chose thier master from the cesspool of evil slave owners.

[TenthAmendmentChampion]

I should have thought of you CSM, my bad!

[Marie]

About two years ago I paid off a card (to the penny) and canceled the account. They charged me a fee for canceling that I was unaware of. I didn’t get a bill from them for six months. By that time, the $15.00 fee was almost at $200.

I called, paid them and canceled the account (again), but I still have the black mark on my credit score. It’s my *only* negative and it still *killed* my credit score.

I hate credit cards. I don’t have any more, but I do have a “line of credit” at a stupid interest rate that we’re working on now. That will be gone in 18 months, then we’re done playing this stupid game.

[D-fendr]

Good advice. You also need to use the old cards now and then for them to be counted in your score. A good way to look at it is to prepare for major purchases by having a small token balance on them.

[CSM]

No problem. Hoosier had our backs.

;-)

[bootless]

Excellent point about not canceling your old cards. Also, if you cancel the card, you lose the available credit, which also boosts your score.

So, if you have available credit lines totaling $50,000, and cancel one with a $25K credit limit, a, say, $5,000 total credit card balance would give you a 25% credit utilization with the canceled card, where it would be only 10% with the $50K line. Big difference in the score. The sweet spot is between 7-15%.

Also, if you ever need a higher limit, the card company that is considering the increase will look at the other limits you have and (in the old days, at least) would often match your highest limit.

And yes, a good account with a lot of age is a valuable credit asset.

[bootless]

Generally a good idea.

However, one of the best “866” calls I’ve ever answered was from the Security Dept. from Amex - seems some criminals had bought my acct # to buy a bunch of online gaming subscriptions and iTunes, to the tune of over $1300.

They confirmed it wasn’t me, canceled the account #, gave me a new one, and then provided all the fraudulent activity over the phone so I could file a police report.

Glad I answered. If I get a telemarketer, junk or other unwanted call, I’ve practiced my response so I can be off the phone within five seconds. I don’t argue. I tell them not to call me again, take me off the list, say goodbye and hang up without further argument. It’s fun.

[nufsed]

I have always had great service from Chase security including twice with problems overseas. Don’t like the interest, but counter some with miles and low balances.

[nufsed]

If you want to boost your credit score in the future, you'll need 2-6 accounts. Keep two cards and use them once a year or whatever their minimum is to keep the account open.

Credit history and two open accounts will give your score a boost and save money if you have to borrow again.

You can put your children on your cards as they become adults (lock the card up) for 6-12 months, then they can spin off their own account and piggyback on your card's good credit history. Helpful for first home purchase or first car loan etc.

[bootless]

Marie, you can dispute that negative mark off your three reports. Do it in writing, certified mail, return receipt, and raise holy hell with the company until they fix it.

[Richard Kimball]

Oddly enough, Chase has treated me very well. I had a Cap 1, still do but never use it.

[mad_as_he$$]

For some number of customers Citi was cashing the check and not crediting the account until AFTER the payment was late. I am working with attorney's to get a CA suit against them. Oh and then they woudl raise you interest rate because you had a “late” payment.