Attorney General Cuomo Secures Agreement From Chase Bank To End Monthly Fees Added To 184,000 Credit Card Accounts Nationwide
NEW YORK, NY (March 30, 2009) - Attorney General Andrew M. Cuomo today announced that Chase Bank USA, N.A. (Chase), J.P. Morgan Chase & Co.s credit card-issuing bank subsidiary, has agreed to stop charging a $10 per month service charge that it added to over 184,000 of its credit card accounts. In addition, as a result of the Attorney Generals actions, Chase has refunded or will refund approximately $4,400,000 to those consumers it had charged under a unilateral change in terms imposed in January.
Consumers across the U.S. carry over 100 million Chase credit cards. For a number of years, Chase has offered some of its cardholders very attractive promotional rates for balance transfers or other loan amounts put onto their Chase credit card accounts. The offers made clear that a one-time transaction fee, usually 3%, would be charged for this very low promotional rate.
Despite the promises Chase made in its offer, in November 2008 Chase notified over 300,000 consumers nationwide, that the terms of the prior offer had been changed. Chase told its cardholders that, in January 2009, it would start charging an additional flat fee - a $10 service charge - each month. This extra $120 per year in additional fees significantly raised the effective APR on these balances, in some cases more than doubling the effective interest rate.
Attorney General Cuomo said: "My office will not sit back and allow banks to promise one thing in its solicitations and agreements with consumers, and then when times get tough, change the deal, leaving consumers holding the bag. Truth-in-lending laws prohibit this very conduct. I am glad that Chase has now reconsidered its ill-advised decision and will now live up to the terms it originally offered and agreed to."
In January of this year, based upon consumer complaints, the Attorney Generals Office contacted Chase and requested a meeting with representatives to address the Offices concerns. Upon meeting with Chase, the Office demanded that Chase cancel the $10 monthly service charges and refund all those that it had collected. On March 26th, Chase agreed to comply with the Attorney Generals demand.
Under the agreement, Chase will be sending out letters to consumers nationwide, including thousands of New York consumers, telling them that as of April 1, 2009, Chase will no longer be charging them the $10 monthly service charge. In addition, Chase has refunded or will refund the service charges that Chase has been charging consumers for the last several months in total amount of approximately $4,400,000. In addition, these consumers will realize savings over the next 12 months of approximately $22,000,000.
The investigation and agreement were handled by Special Counsel Carolyn Fast and Assistant Attorney General Melvin Goldberg with and under the supervision of Bureau Chief Joy Feigenbaum of the Bureau of Consumer Frauds and Protection.