EMAIL SUBJECT
Credit Card Reform article: A statement in your article is factually inaccurate and therefore very misleading; see documentation
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Kathy Chu
USA Today
RE: Credit card reform gets another look
http://www.usatoday.com/money/perfi/credit/2009-02-16-credit-card-reform_N.htm
Dear Ms. Chu,
I am a college entrepreneurship professor. I am also the founder of an advocacy/protest site against abusive treatment by credit card companies. I have been quoted in the New York Times about this issue with Chase, and I have testified before Congress on a related subject, the use of credit cards by small businesses.
You need to know that a statement in your article is factually inaccurate and therefore very misleading:
“Chase (JPM) is tacking on a $120-a-year fee and raising the minimum payment from 2% to 5% of the balance for hundreds of thousands of consumers with low interest rates.”
Journalists have evidently not recognized that the so-called $10 per month Chase “fee” or “service charge,” as stated in the notice, “is a finance charge.” This may sound like simple semantics, but it is a pivotal fact in the numerous lawsuits we are tracking on our site. Chase would like you, as a journalist, to use the word “fee,” because had it not made a mistake in its own fine print by stating that the new service charge “is a finance charge,” then it could possibly have gotten away with this. Because it “is a finance charge,” Chase has violated the terms of a promotional rate that it promoted as “fixed APR Until the balance is paid in full” loans.
As is alleged in the suits, and I have every reason to believe a “reasonable juror” would agree, the document says, “and it is a finance charge” on panel 2, and on first side of the document, it states, “The FINANCE CHARGES section of your Agreement is amended…These charges are finance charges” (please note the all caps print, I have not added any emphasis, the document itself presented the text this way in its original form).
See: http://changeinterms.com/pdfs/Chase-Change-in-Terms_Finance-Charge-5-percent-minimum-payment.pdf
Another part of the article, is very problematic:
“At Chase, some card borrowers were given the choice between the new fee and higher minimum payment, or a higher interest rate of 7.99%. Previously, some borrowers had rates of 3.99%.”
The above is strategy is otherwise known as “bait and switch.” We are now counting 6 class action lawsuits already filed against Chase, plus several more under investigation (and “bait and switch” is in some of the lawsuits, so I am not just saying this off-the-cuff).
Here are other relevant links:
http://changeinterms.com/pdfs/CHANGEINTERMS-THE-ISSUE-BACKGROUNDER.pdf
Feel free to contact me if I may serve to inform your research relative to any future articles.
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on Feb 22nd, 2009 at 1:45 pm
[...] is claiming that it is now charging customers “service fees.” Unfortunately, the media reporting on this story has taken up Chase’s use of “fee” rather than “finance [...]
on Mar 19th, 2009 at 11:14 am
[...] without much apparent effort at critical reasoning or further investigation (I sent a correction to USA Today’s Kathy Chu, for instance, which it seems to have ignored). For a while, there were no observable efforts [...]