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“Yes, Mr. Dimon, I am accusing your organization of extortion” – Letter to JP Morgan Chase CEO Jamie Dimon

According to the ‘Lectric Law Library online dictionary:

EXTORTION – The use, or the express or implicit threat of the use, of violence or other criminal means to cause harm to person, reputation, or property as a means to obtain property from someone else with his consent. USC 18

The Hobbs Act defines “extortion” as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.” 18 U.S.C. S 1951(b)(2).

Below is my letter sent to JP Morgan Chase CEO Jamie Dimon, redacted for security. If you have a low-rate “life of the balance loan” and are one of the customers who have have NOT received a “change in terms” from Chase, we’d like to hear from you. We will of course, protect your privacy.

Here’s my letter:

February 22, 2009

Mr. Jamie Dimon
Chief Executive Officer
JP Morgan Chase
270 Park Avenue
New York, NY 10017-2070

RE: Closure of Chase MasterCard account xxxx-xxxx-xxxx-xxx

Dear Mr. Dimon,

Consider this letter a demand for the immediate hard closure of the above-referenced account, and that it be reported as closed at my request. A check in the amount of $13,542.13 was mailed to Chase on my behalf by the xxxxxxxxxx Credit Union on 2/18/09 to pay the outstanding balance per the current statement. I requested that amount be sent for the sake of convenience, however this letter is also to inform you that I dispute the amount.

Included in that amount, per my statement of 2/8/09, is a $10 dollar special finance charge reflecting a “change in terms” unilaterally, and I assert illegally, imposed by Chase. It was removed from my checking account at the xxxxxxxxxx Credit Union on 1/28/09, abusing the authorization I had previously given Chase to automatically deduct my minimum monthly payment and I consider it a theft. I have never authorized this charge, and in fact it was deducted in a separate instance, as the due date for my loan installment was 2/2/09, when that installment was withdrawn. I have already revoked permission for automatic payments. Please order that a refund of that charge, and any interest purportedly accrued to it, be sent to me.

My credit union assured me that their check issued on 2/18 has more than enough time to reach you and be credited by the due date of my next payment, 3/5/09, so be informed that if it should mysteriously not be credited by that date, I refuse to pay any penalties, finance charges, transaction fees or whatever else you choose to call them.

I am directing this letter to you personally, rather than to your customer service department because:

1) You are the CEO and ultimately responsible for Chase’s unconscionable conduct.
2) In response to a question, posed by Rep. Shelley Moore Capito during Congressional testimony, as to why customers who had not missed payments were seeing increased rates, you said you’d personally deal with such customers.
3) Chase spokespersons have publicly disparaged the hundreds of thousands of customers, including me, affected by Chase’s “change in terms” as “less than one percent” that were “carrying large balances” and “not making progress in paying them down”. These are lies and calculated misrepresentations designed to fool policy makers and the press and must be challenged.
4) You, Mr. Dimon, have been quoted in the press as fearing a wave of credit card defaults as a result of the present economic crisis, for which, I might add, JP Morgan Chase bears significant culpability due to its creation and sale of intrinsically unsustainable OTC derivatives. I am asserting that the conduct of Chase with respect to myself and card holders “similarly situated” (to borrow from the language used in the eight class action lawsuits already filed on our behalf) was designed to cause default as a means to coercively exit agreements to lend at rates Chase decided were now insufficiently profitable.

I’ll begin with the third point. The statements of Chase spokespersons would lead a person unconnected to the issue to conclude that our performance as borrowers had been in some way deficient, (“not making progress”) when the opposite is in fact true: we have impeccably met or exceeded the terms required of us. Had we not, our locked rate “life of the balance” loans would have been unlocked due to the default provisions of the agreement. This is the only “progress” that has any legal relevance.

The other aspect of these, no doubt carefully crafted, public statements is a propaganda initiative designed to inappropriately join our situation to a pre-existing, widely covered policy debate. That is, the problem of borrowers who only make minimum payments on their accounts, which due to the usurious level of interest, results in them paying many times the original cost of their purchases, and taking decades to do so. Thus Chase’s decision to suddenly increase our minimum payments by two-and-one-half times is spun as somehow “helping” us get out of debt. In fact it has caused many of us serious financial harm by forcing us to liquidate assets suddenly, thereby accruing penalties, negative tax consequences, booking of heretofore-unrealized losses, or forgoing future expected gains.

The interest rates we were promised, between 2.99 and 4.99 percent, were advantageous to us, and several points below what was being offered at the time for various consumer loans, including HELOCs, as well as not requiring, as your promotional material pointed out, papers to sign, fees, points, appraisals or liens. All that was required was a one-time balance transfer fee that was added to the principal amount of the loan. Nothing was mentioned, by the way, of the assessment in the future of an arbitrary $10/month “finance charge/transaction fee” that accrued interest at a higher rate. Your spokespersons of course have not provided a satisfactory explanation of how this charge helps us “make progress” and they can’t, because it doesn’t.

Now for the question of the “accusation” that customers such as I were “carrying large balances” for a long time. Though this claim is contractually meaningless, as we were within our rights under the agreement to carry any balance that did not exceed our credit limit for an unspecified amount of time, it is important to evaluate that statement so Congress, the press and the public may judge how truthful Chase has been; I intend to distribute publicly a version of this letter, redacted for security. To demonstrate, I will use my account history, which I can document, though I am aware of dozens of people whose account histories would be equally illustrative.

My account was opened in 1995, in response to an unsolicited offer from Chase informing me that due to my good credit, an account had been pre-approved for me. Over the years, Chase increased my credit limit several times without prompting from me. In June 2005, when I received the first offer for a fixed rate “life of the balance” loan, my credit line was $21, 100 and my balance ZERO. I borrowed $20,000 at the offered rate of 4.99%.

In August of 2008, my balance was less than $4500 and my credit limit $25, 500. I received another Chase offer to borrow at the rate of 3.99% for the life of the balance. I borrowed $10, 500.

Chase’s “change in terms” was sent to me and other customers in November, just three months later. Obviously, the reason for the change in terms was not because Chase considered my balance “too large” or “too long.” In fact, I had evidently not borrowed enough, as I was sent another offer in September 2008, which I fortunately passed up.

I do so hope no one at Chase will send me a letter stating that they never received any objection from me to the new terms, and gosh, why didn’t I call to negotiate some arrangement. If a man with a gun breaks in through my bedroom window, I have to assume that he has no intention of leaving until he gets what he came for, something I wouldn’t willingly give. What would negotiation be in such a case, “Take whatever you want just please, please don’t kill me”? The “change in terms” offered less room for negotiation than that.

Chase informed me that my minimum payment would be increased to 5% of the balance from the current 2%, that my account would be charged an additional $10 dollars per month whether I used it or not, and if I wanted avoid these terms I could pay my balance in full in the next statement and close my account. Period. Apparently I had quickly gone from “most valued customer” to persona non grata for reasons unknown to me.

This brings me to the fourth point, what actually was “wrong” with your “most valued customers: we had made payments on time, without fail and we hadn’t exceeded our credit limits, leaving Chase with no legal justification for jacking our rates. I suspect that the accounts of customers with fixed low-rate loans were subjected to quantitative analysis based on our credit reports in order to profile customers who, while keeping up with their payments currently, would no longer be able to do so if compelled to pay more than double the present amount, were unlikely to have the ability to pay the balance in full on demand, and who would, nevertheless, make every attempt to meet your demands rather have their excellent credit ratings knee-capped.

I hope that Congressional investigators and court proceedings will attempt to prove or disprove this assertion. As you are aware, the credit rating is no longer only a determinant of whether and under what terms a person may borrow; it is now being scrutinized by insurers, potential employers and landlords as well. The fine credit reputation established by this group of customers as a result of a lifetime of meeting financial commitments is a valuable asset.

My suspicion is based on the fact that I have learned that not all customers with life of the balance loans received change in terms notices, and customers who did call Chase to try to negotiate were pressured to relinquish their fixed rates and accept a doubling of their APRs, in order to maintain a 2% minimum payment and avoid the $10/month additional finance charge.

Yes, Mr. Dimon, I am accusing your organization of extortion. Though eight civil class action suits have already been filed, and at least two more are being prepared against Chase for violations of the Truth in Lending Act and other statutes governing unfair business practices, I believe that a criminal prosecution for racketeering may be warranted.

I must tell you that until recently, I had no cause to be dissatisfied with the treatment I received from Chase, though I’ve since learned many others have. However, this conduct is so unethical, such a breach of trust, that I will under no circumstances do business with your bank again. But that’s not all. Your actions have created a movement of people determined to change some terms of our own, and we won’t rest until Chase, and your entire industry faces our terms: DEAL FAIRLY OR BE SHUT DOWN.

Most sincerely,

Lyn XXXX
XXXXXXXXX St,
XXXXXXX, NY XXXXX

Cc:
Senate Banking Committee
Senate Subcommittee on Permanent Investigations
House Committee on Financial Services
Giskan, Solotaroff, Anderson and Stewart, LLP
The Braun Law Group
Wexler Wallace, LLP
www.ChangeInTerms.com

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