Chase Bank USA sued for illegally increasing interest rates and reporting duplicate account to credit bureau Experian

(LITIGATION NEWS) August 30, 2005—After Chase Bank acquired Bank One in 2004, Christine Baker received many complaints about the interest rate increases from the readers of her credit websites.

In November 2004, the mother of a young woman serving in Iraq submitted the scan of the Chase “welcome” letter with new account terms addressed to her daughter, a Bank One account holder.  According to the disclosures, the interest rate increase to 28.74% was based on the Experian credit report. 

The Chase welcome letter did not mention the rate increase at all, but it referred only to changes in the terms as per the disclosures.  The print on the disclosures is so small, it is barely readable with 20/20 vision and the scans are posted at http://fight-back.us/forum/index.php?showforum=54. 

A Chase customer since 1987, Ted Pett Jr. received the notice with the rate increase back in 2001.  He promptly notified Chase that he elected to close the account in order to be able to pay off the balance under the original terms, as per the instructions on the Chase disclosure.  Chase subsequently closed the account, but increased the interest rate anyway.

On 1/30/04, Mr. Pett Jr. filed suit in California Superior Court against Chase Bank USA, N.A., owned by the holding company JPMorgan Chase & Co. (NYSE: JPM). Chase had the case moved to the US District Court, Central District, Eastern Division, case # ED CV04-00227 VAP (SGLx) and trial is scheduled for 5/2/06.

Did Chase falsely claim that it increased the rate due to the Experian credit report?  Mr. Pett Jr. insists:  “All of my credit accounts are now and have been in good standing, paid as agreed and never late.”

In 2002, Chase reported the account in duplicate to Experian, possibly with the intent to damage the credit rating and to prevent Mr. Pett Jr. from obtaining more favorable financing to pay off Chase.

The exhibits document that Mr. Pett Jr. had done everything just right.  He kept the Chase disclosures, statements and correspondence as well as his letters and credit reports.

In 8/01, Chase notified Mr. Pett Jr. of the rate increase and stated that its decision to raise the rate from 14% to 19.99% was “based in whole or in part” on the Experian credit report. [Exhibit A]

On 8/28/01, Mr. Pett Jr. mailed certified the notice of his election to close the account and to pay off the remaining balance under the existing terms.  [Exhibit B]

Chase acknowledged receipt of the mailing by closing the account, but contrary to its terms, it raised the interest rate to19.99%. [Exhibit B-D]

By June 2002, Chase reported this account TWICE to credit bureau Experian.  Both accounts were reported as closed and with the outstanding balances near the credit limit. According to Fair Isaac, its FICO credit scores are utilized in over 75% of all credit decisions and the FICO credit scores are lowered by large balances resulting in a high balance/limit ratio. [Exhibit G]

On 9/5/03, after Mr. Pett Jr. was unable to resolve the dispute by telephone, he advised Chase in writing of the duplicate credit reporting and he submitted proof of his timely notice to Chase. [Exhibit K]

Chase responded on 9/30/03 [Exhibit L]:

“We understand that your concern is of great importance to you and that you wish a particular outcome.  We regret that you are not satisfied with our decision on this matter.  As mentioned in our previous letter, we have reviewed your account and we are unable to fulfill your request for a lower Annual Percentage Rate (APR) on the current balance.

We would like to assure you that your inquiry has been reviewed extensively, and our position is based upon compliance with applicable laws and regulations.”

Which “applicable laws and regulations” require Chase to defraud its customers and to report accounts twice to credit bureaus? 

On 8/24/05, Ms. Baker requested answers, clarification and comments to be included in this release from Tom Kelly, Retail Financial Services and the U.S. Region, JP Morgan Chase and from the attorneys representing Chase, James F. McCabe, Michael I. Katz and Mary E. Ahrens with Morrison & Foerster LLP in San Francisco.  Apparently the allegations are true, Ms. Baker received no response.

In 10 years of mortgage and credit research, Ms. Baker learned that banks are only concerned with record profits for the shareholders and excessive salaries for the executives—compliance with consumer protection laws is not profitable.

Unfortunately, the national banks have much more cash than consumers to bribe (lobby) legislators and they succeeded in having state laws pre-empted.  The OCC is the federal regulating agency and it acts very much as if on the bankers’ payroll, as it routinely ignored Ms. Baker’s and other consumers’ complaints or it sided with the banks, no matter how illegal the banks’ actions were.

After 3 years of credit litigation, Ms. Baker knows that a pro se litigant has next to no chance to prevail in an American court and the best one can hope for is a settlement.  Of course the defendants demand confidentiality agreements and they never admit to any wrong doing.

Those secret settlements enable defendants to continue exploiting and defrauding consumers.  Ms. Baker hopes that many consumers will publicize their suits and raise awareness of the corporate misconduct.

Other consumers with similar problems and rate increases due to the Experian credit report and attorneys interested in representing Mr. Pett Jr. may contact him at mrted2006@yahoo.com. 

The exhibits are posted at http://fight-back.us/forum/index.php?showforum=78

Ms. Baker’s websites include http://mylitigation.net, http://creditsuit.org/, http://junkfaxsuit.info/, http://creditfactors.com/ and the forum at http://fight-back.us/forum/

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