Alert October 02, 2012

Bank Settles Class Action Over Finance Charge Hikes

Parties in a putative class action alleging that defendant improperly raised annual percentage rates charged to its credit card holders have reached a $10 million settlement. Plaintiff alleged that defendant had sought to raise the APR on her credit card to more than double the “fixed” rate stated in her card agreement. According to plaintiff, the bank offered her the option of accepting the increased rate or canceling her credit card despite plaintiff’s insistence that she had never missed a payment. Plaintiff filed suit on behalf of a putative class of 132,000 credit card customers, alleging violation of the California Business and Professions Code and the Truth in Lending Act. Defendant subsequently agreed to settle the lawsuit for 40% of the claimed damages, including attorneys’ fees and payment to the named plaintiff.