American Express has been found to clearly violate credit card agreements by increasing interest rates irrespective of the creditworthiness of its clients. A lawsuit has been filed by Atlanta law firm, Webb, Klase & Lemond. Based on the allegations, the company seems to have increased interest rates unilaterally in violation of the credit card agreements.
The most creditworthy clients are charged with the interest rates by the banks. This is termed the prime rate. This had been the practice that was established after years of dealing with the customers consistently. The lawsuit filed against American Express claims that the company has violated in terms of breach of faith and fair business practices, by making the decision to stop tying interest rates of credit cards to the prime rate.
Consumers, who had always maintained good business relationships with the banks with respect to making timely payments, staying within their credit limits, etc., were not spared as American Express had raised interest rates for them too. Even the customers, whose creditworthiness and credit scores in general had not declined, were also not spared by American Express. They too were victims to the increased interest rates. The lawsuit has further demanded that American Express refund the excessive interest that has been charged and has also demanded relief in other forms.
The case between Meeks vs. American Express Centurion Bank, Inc., is still pending in the Superior Court, Fulton County, Georgia. The case number is 2010CV190851. In this instance, Mr. Meeks was charged a "fixed variable" rate which was equivalent to the prime rate as well as the marginal rate of interest at 2.99%. As per the complaint the company seems to have increased the clients` marginal rates in such a way that in spite of the prime rate falling to substantial lows, the clients suffered huge increase in interest rates. These rates were being imposed on customer balances that already existed.
American Express has offered its customers to either freeze or close the credit card account, but this would adversely affect their credit score. If the customers closed their credit cards in opposition to the increased interest rates, it would not only have a negative impact on their credit score but it would also imply that consumers have been pressurized into accepting American Express` increased interest rates unilaterally. This could cause a huge setback for American Express as it was recently voted as the most popular card in the market and had topped the list with 769 points on a 1000-point scale in a survey done recently.