Class Claims JP Morgan Chase|Reaped Millions By Willful Error|On Leap-Year Interest Rates

     FORT LAUDERDALE (CN) – JP Morgan Chase & Co. bilked its credit card holders of more than $100 million by charging them daily interest during leap years based on 1/365th of the annual percentage rate, rather than 1/366th of the APR, a class action claims in Federal Court.

     Named plaintiff Ann Caban claims the damages exceed $100 million, even before interest and costs are added. She claims Chase billed her and “tens of millions” of others at a bogus “daily periodic rate” based on a fault “corresponding APR.”
     The complaint states: “For example, using Chase’s calculations and represented corresponding APR in Caban’s March 2008 billing statement, Chase multiplied the published errant periodic rate of .0811% by the 30 day cycle. Chase then applied the resulting 2.4033% against Caban’s published Average Daily Balance of $632.57, which translated into a finance charge of $15.20 to Caban.
     “Had Chase used the actual number of days that compose a leap year in calculating the daily periodic rate for Caban’s March 2008 statement, the true daily periodic rate for that billing cycle would be .07989%. After multiplying the true daily periodic rate (.07989) by the published 30 day cycle, the correct percentage that should have been charged against the published average daily balance is 2.3967%. Chase should have then applied the 2.3976% against published Average Daily Balance of $632.57, resulting in a finance charge of $15.16 rather than the $15.20 that was charged to Caban.
     “Excluding the compounded interest, it can be reasonable extrapolated that this $.04 overcharge per month, if not enjoined, will continue for the remainder of this 2008 calendar year. Assuming an average daily balance of $632.57 for each month in 2008, the continued use of the inflated daily periodic rates will result in an excess charge of $.48 for the year for Caban.
     “This class action transcends the economics of Caban’s individual claim. Tens of millions of the putative members of the four classes sought to be certified in this suit have been and will continued to be overcharged by Chase relative to their outstanding average daily balances unless this practice meets judicial condemnation and is enjoined.”
     [Unfortunately, the complaint states that Chase erred by multiplying the “errant periodic rate” for March “by the 30 day cycle.” However, March has 31 days. It is unclear, then, whether Chase actually gave the plaintiff a break that month, as the “true daily periodic rate” of .07989 multiplied by 31 produces 2.47659%, which is higher than the 2.4033% that, the complaint alleges, Chase did charge her.]
     The complaint states that Chase’s own Web site claims it has issued 156 million credit cards, and has relationships with 290 mortgage offices, 14,500 auto dealerships and 5,200 schools and universities. The median value of a household’s credit debt in the United States is about $2,200, according to Federal Reserve System’s the latest Survey of Consumer Finances, the complaint states. It adds: “Banking entities other than the Defendant herein have properly and fairly calculated their respective daily periodic rates for 2008 using the 366 calendar year as the denominator rather than unfairly, unconscionably, and deceptively redefining a leap year to have only 365 calendar days as Chase has willfully done.”
     Plaintiffs are represented by Roman Groysman with Ginnis & Groysman.

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