The class action lawsuit challenges Chase’s conduct with respect to the way it communicated and adjusted the annual percentage rate (“APR”) of Chase credit cardholders who closed their Chase credit card accounts in order to opt out of Chase’s APR increase and who maintained an outstanding balance in their closed accounts.

In the beginning of 2010 the Credit Card Holder’s Bill of Rights became effective, which, among other things, precludes creditors from raising interest rates on an existing credit balance unless a person is more than 60 days late on a payment. Moreover, creditors can only increase APR on purchases made after that. 

The Bill of Rights was passed in May but only effective this year giving banks a last chance opportunity to modify credit terms before the new strictures take place.  Over the past several weeks, prior to the implementation of the Bill of Rights,  credit card customers from a number of banks including Chase have complained about sudden changes in terms. Some have seen interest rates dramatically increase  while others face an increase in minimum monthly payments. Much of this is occurred shortly in advance of the effective date of the Credit Card Holders’ Bill of Rights

Plaintiff’s claims arise from just such an effort by Chase, which recently sent out notices of interest rate increases that allowed cardholders to opt out of by closing their accounts.  Rather than paying the higher APR, Plaintiff chose to maintain his existing fixed rate APR and close his account.   A few months thereafter, Chase sent out a nearly identical notice of APR increase, which by all appearances applied only to those with open credit card accounts. Specifically, the notice stated that the only way for a card holder to opt out of the subsequent interest rate increase was to close their Chase credit card account.  Plaintiff, however, had already closed his account in order to maintain his fixed rate lower APR.

Chase, nonetheless, raised the interest rate on his closed credit card account because Plaintiff did not affirmatively opt out a second time from the rate increase by again closing his account, which had already been closed