On May 16, 2012, the parties advised the court that on May 11, 2012, with the help of the Hon. Edward A. Infante (Ret.) of JAMS, the parties reached an agreement in principle to resolve a class action filed by Chase credit card customers against Chase that I had previously written about on this blog.
About a year ago, on May 13, 2011, the District Court of the Northern District of California certified this case as a class action. Chase credit card customers allege in the complaint that they were offered balance transfer loans or loans in the form of blank checks that were connected to their credit cards, but with different terms. The plaintiffs also claim that the promotional rate loans offered by Chase had terms that were at low interest rates usually with APRs or interest rates set at 2.99% or 3.99% “for the life of the loan.” Chase used the promise of these low fixed rates for the life of the loan to induce consumers to transfer their balances from other credit card accounts to a Chase account. Most people paid a substantial balance transfer fee to Chase to lock in the promotional rates for as long as there was a balance remaining on the tranferred amounts.
In November 2008, Chase sent its customers a notice stating that the minimum monthly payments would go up by 150%, from 2% of the balance to 5% of the balance. The notice of change in terms sent by Chase also added a new finance charge misleadingly described as an “Account Service Charge of $10 per month.” This new account finance charge effectively increases the customers’ interest rates even more.
The case was set to go to trial soon, and this led to a mediation before Retired Judge Infante. The terms of the settlement have not been made public yet. The parties told the court that the terms of the agreement will be memorialized in a comprehensive written Settlement Agreement, which parties will file with the court as part of a motion for preliminary approval.
