Credit card holder James McCoy has filed a class action lawsuit in the Supreme Court against Chase Bank. He said that he wants a particular amount of his credit card interest rate taken off his billing statement due to Chase Bank’s inaction to notify him of such an increase prior to its application.
New credit card rules and regulations stipulate that credit card issuers must notify their card holders of interest rate increases prior to the date when such increase or increases will be effective. The law reserves 45 days for credit card companies to notify their credit card holders before they can even apply the rate increases in their computations of the amount a credit card holder must pay.
McCoy complains that the interest rate increase took effect even before the new Credit Card Act had been implemented. He said further that Chase Bank had previously frozen his account before increasing his Chase Slate credit card interest rate. At the immediately succeeding billing and payment cycle, McCoy said that Chase Bank did not include any notice or indication whatsoever that his interest rate was increased. Additionally, he says that the rate increase applied to his previous credit card statements increasing actual amounts that he needed to pay. It was only after the rate had been increased that McCoy says he became aware of such an increase.
Chase Bank says that they did not need to notify McCoy due to the contract stipulating penalty rates the moment credit card applications are finally approved and opened, with proper observance of the payment methods. The bank says that McCoy already knows such information and he was constantly reminded even during the process of his credit card application.
In general, banks are required to disclose information on penalty rate and rate increases under the Truth in Lending Act Regulation stating that it is always imperative for lenders to disclose rate increases prior to their future application. Banks also need to inform their card holders of the specific details on how they are going to notify the latter about interest rate increases. McCoy says that regardless of Chase Bank’s statement that he was aware of the possible increases the moment, he signed the contract, he was still entitled to prior notice when pending interest rate increases are to take effect.
McCoy’s side argues that Truth in Leading Act Regulation Z intends to reinforce notice every time increases are to take effect and not only during the card holder’s signing of contract.