Class Accuses Chase Bank of Fraud

CHICAGO (CN) - A federal class action claims Chase Bank sends mass offers of credit, enclosing checks that are "ready to go," then refuses to honor the check, leaving its victims liable for returned check fees, insufficient funds fees, and late fees on mortgage payments.

Lead plaintiff Gerald Maher sued Chase Bank USA, National Association and Chase Bankcard Services, alleging common law fraud, and deceptive and unfair trade.

Maher claims Chase sent him a form solicitation in April 2009, which included several checks.

"These checks are ready to go," the solicitation letter stated. "You can write them for any amount up to the unused portion of your credit line. Just make sure you have enough available credit for the transaction(s), interest, and any related fees."

Maher says he called Chase, which told him "that he could use a convenience check exemplified by Exhibit A in an amount up to $5,000."

So he wrote a check to himself for $2,500 and cashed the check at his bank, Palos Bank and Trust, Maher says.

But "Upon Palos Bank and Trust's presentment of the check for payment to Chase on or about April 15, 2009, Chase refused to honor check #8709, drawn on Chase's account number 365XXXXXXXX917, for the amount of $2,500," Maher says.

"Thus, Chase mailed plaintiff and other consumers (both in Illinois and nationally) form convenience checks that were represented as being available for use in amounts up to the consumers then unused credit line. However, without advanced notice, Chase deceptively and unfairly chose not to honor such checks, thereby proximately causing damage to these consumers (i.e. return check fees, NSF [not sufficient funds] fees, late fees). For instance, plaintiff's automatic payments, including his mortgage payment, were marked NSF as a result of Chase's conduct.

"In furtherance of and/or in an attempt to cover up their unfair and deceptive practice of mailing consumers form convenience checks that they intended consumers to use, but that were not 'ready to go' 'for any amount up to the unused portion of [the consumers'] credit line,' Chase sought to provide a pretext for its refusal to honor such convenience checks, including the one which plaintiff used on April 14, 2009." (Brackets in complaint.)

Maher adds: "Chase sent materially identical or substantially similar materials ... to hundreds, if not thousands of consumers in the State of Illinois and across the continental United States. Thus, in furtherance of and/or in an attempt to fraudulently conceal Chase's prior unfair, deceptive and damaging conduct (with consumers who had been damaged by having the checks used with third parties which Chase would not honor), Chase lowered the consumers' available credit limit below the amount for which the convenience check had been written as a pretext for having dishonored the checks. ...

"Presumably to avoid the cost of Chase paying to pre-check the credit scores of every person to whom they sent convenience checks while simultaneously maximizing their profits by simplifying the perception of 'convenience' for the checks, Chase sent the checks without either:

"a. Requiring an additional step for interested consumers - such as an advanced credit check; or

"b. Informing recipients that the checks could not be as 'conveniently' used as their receipt implied, but that there was a risk of the check being refused after its use.

"In fact, as demonstrated by the plaintiff's advanced call to Chase, when Chase presented with the opportunity to inform the plaintiff of the truth, they suppressed the material fact that it was Chase's procedure not to perform their final credit check of any consumer until after the consumer used the check and the check was in turn presented to Chase for payment."

Maher seeks punitive damages. He is represented by Lance Raphael, with the Consumer Advocacy Center.

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