Famous Credit Card Law Suits
Credit card fraud and tricks is very common and there are no barriers for criminals. But the thing that really ruins the confidence in the whole credit card system is when credit card issuers cheat. There are so many ways in which customers are cheated that enumerating them will not be possible but if there is light in the tunnel, it is that there are legal ways to make credit card issuers pay for their tricks. There are many different examples of class action lawsuits against various credit card issuers. It is true to say that almost all major credit card companies (or their legal predecessors) have been brought to court because of their barely legal or outrageously illegal practices.
The list of famous lawsuits against unscrupulous credit card issuers is really very long. Additionally, it is being constantly updated with new examples but even the few cases that we'll discuss below are enough to give you an idea of how cheeky can money-hungry institutions become.
There are several lawsuits against credit card issuers that ended in payments of over $300 million. For example, a recent lawsuit against MasterCard, Visa, Diners Club and several other financial institutions made them pay $336 million in damages to credit card holders due to their shady practices of charging excessive fees on foreign currency transactions. This lawsuit is hardly a typical example, though it concerns many companies and individuals who travel internationally or who purchase goods or services in foreign currency.
The most typical class action lawsuits against credit card issuers are related with billing malpractice. Billing malpractice concerns everybody, or at least a major group of the cardholders. One of the most famous lawsuits for billing malpractice was the case against First USA (which later became BankOne and then Chase). First USA changed without notice the payment date and many of its customers couldn't manage to pay their bills on time. First USA gladly charged them $29 for late payment and for those of them, who had another late payment, there was another surprise – a 10 points increased interest rate!
Similar was the case when again First USA didn't mail the monthly statements and because of this many customers failed to pay on time and were again charged late fees. First USA claimed that this was because of a computer failure but didn't return the money. And yes, First USA was sued and the affected party managed to get compensation.
Perhaps the most notorious company is Providian. It used to permanently overbill its customers, mainly on late payments. Very often Providian used to charge its credit card holders for credit insurance they have not agreed to. In one of the settlements, Providian had to pay $300 million in damages to its customers. Probably this amount of money was enough to teach them a lesson because recently there are no complaints against Providian of cheated credit card holders.
Most of the credit card lawsuits against other issuers revolve also around late fees. Generally, it is the credit card companies who mark payments, which arrived on time, or even weeks before the deadline, as late. Besides the late fee payment, very often credit card holders are punished by a dramatically increased interest rate – for instance from 7% to 21%, as was in the case of Capital One.
Citibank has been sued over interest rate increase. There have been many cases when people who paid on time everything they had to pay to Citibank were punished by an increased interest rate (28%) because negative information about them appeared on their credit file. Even in the cases when the victims proved that the negative information was erroneous, Citibank refused to restore the interest rate to its previous levels.
A new type of cheat, or more precisely crime that will keep busy the legal department of credit card issuers are privacy concerns. Credit card issuers collect a lot of personal information, which if not guarded properly can easily be stolen by criminals, thus threatening the interests of card holders. There are already several class actions filed on this grounds and what is certain is that even more will follow. A similar prediction can be made about the rise of lawsuits for misleading advertising, which is also on the rise.