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Wednesday, June 19, 2024 | Back issues
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Zero-Percent Special, My Foot,|Irate Class Tells Capital One Bank

SAN FRANCISCO (CN) - Capital One Bank dupes credit cardholders into accepting a "0% balance transfer" offer that leaves people worse off than before, a class action claims in Federal Court.

Lead plaintiff Priscilla Barton accuses Capital One of "deceptive representations and omissions surrounding its '0%' balance transfer offers."

Under Capital One's standard credit card arrangement, customers have 25 days after the close of each billing cycle to pay their "new balance" without interest, Barton says. The new balance includes purchases made during that cycle, previous outstanding balance and interest and fees. Capital One calls the 25 days the grace period.

"Numerous times every year, Cap One solicits its cardholder base to take 0% balance transfers," the complaint states. "Cap One markets the balance transfers as a 'chance to save' - a means for the cardholder to pay off higher interest loans owed to other creditors. Cap One promises that these balance transfers will carry 0% interest for six or twelve months. To accept a balance transfer offer, all a cardholder has to do is use one of the 'convenience checks' which come attached to the offer. Cap One promises that it will segregate the transferred balance from other segments of the cardholder's account. The balance transfer comes at a cost: Cap One charges the cardholder a fee of 2%-3% of the total balance transferred.

"Unbeknownst to plaintiff and classes, however, once a cardholder accepts Cap One's '0% interest' balance transfer offer, Cap One unilaterally, and in breach of the cardholder agreement, eliminates the grace period and begins charging interest on all new purchases from the date of the balance transfer forward.

"Cap One did not disclose that it would eliminate the grace period for cardholders who accepted Cap One's 0% balance transfer offers and subject them to high interest charges. Cap One did not disclose that the only way for these cardholders to avoid interest charges on new purchases once they accepted the 0% balance transfer offer was to pay the full amount of these purchases plus the full amount of the balance transfer - in the same month that the cardholder accepted the balance transfer, even though the promotional period on the 0% percent offer was for 6 or 12 months. ... Contrary to the simple 'chance to save' that Cap One represented the balance transfer would provide, and that cardholders paid for, many cardholders who accepted these offers found themselves worse off than they were beforehand."

Barton seeks restitution, an injunction and compensatory and statutory damages for breach of contract, breach of faith, unfair competition, and violations of the federal Credit Card Accountability, Responsibility and Disclosure Act.

(CARD Act) and the California Unfair Competition Law (UCL).

Her lead counsel is Shana Scarlett with Hagens Berman Sobol Shapiro, of Berkeley.

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