Federal Court Certifies Nationwide Class Of Bait and Switch Victims in Alleged Chase Bank "Check Loan" Scheme

SAN FRANCISCO--(BUSINESS WIRE)--Credit card customers who accepted a promotional offer from Chase Bank for "life of the loan" low interest rates, but who were later forced to assume new oppressive terms or accept higher interest rates, had their case certified for class treatment in an order issued late yesterday afternoon by U.S. District Court Judge Maxine M. Chesney in the Chase Bank "Check Loan" Contract Litigation.

“This is an excellent decision, not only for the over 1 million Chase cardholders who were on the receiving end of Chase's conduct, but also for the many millions of other responsible consumers who everyday count on their banks and lenders to act responsibly and in good faith.”

Lieff Cabraser attorney Michael W. Sobol, counsel for plaintiffs and the class, stated, "This is an excellent decision, not only for the over 1 million Chase cardholders who were on the receiving end of Chase's conduct, but also for the many millions of other responsible consumers who everyday count on their banks and lenders to act responsibly and in good faith."

Plaintiffs charge that Chase Bank lured them into accepting "check loan" promotions offered with monthly credit card statements with promises of permanent low interest rates, but when the Bank no longer viewed the loans as profitable, it unilaterally changed the deal. Plaintiffs argued that Chase Bank targeted some of its most responsible customers for the very reason that customers repaying the check loans according to the original terms were no longer viewed as sufficiently profitable.

In November 2008 and June 2009, Chase Bank raised the minimum monthly payment from 2% to 5% of account balances for certain targeted groups. As an alternative to accepting the higher minimum monthly payments, Chase Bank offered to keep the lower minimum payments if customers agreed to higher interest rates above the promotional rate. Plaintiffs charge that Chase's intent in sending such notices was to force cardholders to (a) accept higher APR loans to maintain the 2% minimum payment requirement, (b) make a late payment and trigger a penalty APR -- generally 29.99% -- and late fees, and/or (c) pay off or transfer the loans to other available credit sources.

Plaintiffs sought certification of their claim for the breach of covenant of good faith and fair dealing. In its order, the Court found that plaintiffs satisfied the requirements of class certification, including that claims of the named plaintiffs were typical of those of the class:

“Here, the claims of each named plaintiff and each class member are based on the same conduct by Chase, specifically, Chase's decision to change the terms of the subject loans, and rely on the above-referenced common evidence to make similar, if not the same, arguments in support of liability. Such showing is sufficient to demonstrate typicality, and Chase's arguments to the contrary are not persuasive."

The Court certified the following class:

"All persons or entities in the United States who entered into a loan agreement with Chase, whereby Chase promised a fixed APR until the loan balance was paid in full, and (i) whose minimum monthly payment was increased by Chase to 5% of the outstanding balance, or (ii) who were notified by Chase of a minimum payment increase and subsequently closed their account or agreed to an alternative change in terms offered by Chase."

Consumers can learn more about the class action lawsuit at http://www.lieffcabraser.com/consumer-protection/case/35/chase-check-loan

About Lieff Cabraser

Lieff Cabraser Heimann & Bernstein, LLP, is a sixty-plus attorney law firm with offices in San Francisco, New York and Nashville. We are among the largest law firms in the United States that only represent plaintiffs.

Since 2003, The National Law Journal has selected Lieff Cabraser as one of the top plaintiffs' law firms in the nation. We are one of only two plaintiffs' law firms in the United States to receive this honor for the last eight consecutive years.

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