Chase to pay $100 million for plundering credit card customers
Is this the $100 million message that finally will cause banks to stop playing us for fools?
We suppose it's naïve to think so, but at least consumers are fighting back -- and winning something, in this case.
This week, it's JPMorgan Chase in the big-bad-bank spotlight.
The nation's largest bank by deposits has agreed to pay $100 million to settle customers' allegations the bank hiked monthly minimum payments on its credit cards to boost profits.
The lawsuit alleged the bank convinced cardholders to transfer balances from other lenders to Chase credit card accounts on the promise they'd get a fixed interest rate.
After a little while, Chase raised minimum payments, putting some of these customers in a bind.
This 3-year-old lawsuit wasn't difficult to see coming. We warned readers at the time about these terrible account changes.
In February 2009, we reported that Chase had raised the minimum payment on some of its credit cards from 2% to 5% of the balance in a rash of "change in terms" notices.
Consumers who complained could accept a higher 7.99% interest rate on the promotional balance or agree to a steeper minimum payment and $120 yearly fee.
As if that wasn't enough, Chase also raised customers' interest rates by as much as 20 percentage points, up to 29.99%.
Chase wasn't trying to cover it up, though.
In fact, the bank was transparent in its intentions: "The principal factor we considered in amending your account is maintaining profitability on your account."
That's right, Chase wanted more of your money.
According to Reuters, the settlement represents 45% of the $220 million in up-front transaction fees that about 1 million people paid for the promotional loans.
Of course, this isn't the only settlement under JPMorgan's belt this year. It also was among the lenders that agreed to pay billions to settle claims that they engaged in anticompetitive practices to fix credit and debit card fees.
This is yet another shining example of how some institutions will stop at nothing to take advantage of customers.
Take it as another warning to stay away from the big boys.