The United States District Court for the Central District of California dismissed a putative class action alleging, among other claims, violations of the National Bank Act and violation of the Nevada Deceptive Trade Practices Act, stemming from the retroactive application of the default APR. Plaintiff obtained a credit card from defendant, a bank, and after plaintiff failed to make his minimum monthly payment for two consecutive months, in the third month, defendant raised his interest rate to the default APR, and applied it to the previous month’s billing cycle.
The Court rejected plaintiff’s claim that defendant violated the NBA by charging an interest rate higher than that permitted under Nevada law on the ground that Nevada has no usury law or maximum allowable rate. According to the Court, because “the [d]efault APR did not, and indeed, could not, exceed the rate allowable under state law,” plaintiff could not state a claim for violation of the NBA. The Court also dismissed plaintiff’s state statutory claim for failure to identify a misrepresentation or concealment of material fact because the credit card agreement “explicitly stated that a [d]efault APR could be imposed retroactively to the beginning of a billing cycle.”