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Credit > Credit Cards > Class Action Lawsuits Against Credit Card Issuers |
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." |
Class Action Lawsuits Filed Against Credit Card Companies |
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. |
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." |
Credit > Credit Cards > Class Action Lawsuits Against Credit Card Issuers |
Debt Kit -- Settle unsecured debts for less than half of amount owed Credit Kit -- Improve your credit rating and reduce monthly payments by $200+ |
