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Monday, April 22, 2024 | Back issues
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Class Certified In Chase ‘Check Loan’ Case

(CN) - A federal judge has certified a class-action lawsuit against Chase Bank that alleges the company promised consumers permanent low interest rates on "check loans" and later forced them to make increased minimum payments or accept higher interest rates.

The decision by U.S. District Judge Maxine Chesney lets consumers who accepted Chase's promotional offer which promised a "fixed APR until the balance is paid in full" sign on as plaintiffs in the class lawsuit filed in July 2009.

The class alleged Chase tricked consumers into accepting "check loan" promotional offers which promised a fixed APR for the life of the loans, and then changed the terms when the loans were no longer a profitable investment for Chase.

According to the complaint, in November 2008 and June 2009, Chase increased minimum monthly payments from 2 percent to 5 percent of the account balance and offered to keep the lower minimum payments for those consumers who agreed to higher interest rates.

The plaintiffs sought class certification of their claim for breach of the covenant of good faith and fair dealing, among other claims which were dismissed in November 2009.

The court found that the plaintiffs met the requirements of class certification.

Chesney estimated that the class could encompass more than 1 million account holders whose minimum payment was increased by Chase.

Chase had argued that the commonality requirement was not satisfied, since there were differences in the language used in the various letters by which the offers were made.

The court rejected Chase's argument, finding that "each offer sets forth the same basic terms, specifically, that the cardholder, in return for payment of a transaction fee, could use a check to borrow funds, which funds were to be repaid to Chase at a fixed APR." The fact that the amount of damages incurred by individual class members may differ does not defeat certification, the order states.

Chesney also rejected Chase's contention that the plaintiffs' claims were not typical of the whole class, since some class members defaulted on their accounts after Chase changed the terms of the loans, while others kept their accounts in good standing. The court found that such defaults would have occurred after the alleged breach and therefore the claims of defaulting class members stemmed from the same conduct. The claims of class members with larger outstanding balances than those of the average class member are still typical of those of the class, the order states.

The court ruled that the 10 plaintiffs who filed the action could adequately protect the interests of the class and could resolve the class claims more efficiently than through individual lawsuits.

Chesney instructed the class to come up with a proposed form of notice to be mailed to the class by June 17, and allowed Chase to file a supplemental declaration.

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