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Chase to refund a charge that “is a finance charge,” but continues to coerce and defame 400,000 account holders

On March 27, 2009, a CNNMoney.com article by Marshall Eckblad announced partial good news for those of us who Chase “aimed at,” but I have some things to say because although I appreciate the small victory, we’re “not done yet.”  Unfortunately, this will be a “Long Kiss Goodnight.” 

We must continue to refute a defamatory portrayal cast upon 400,000 of Chase’s “most Valued Cardmembers” before members of the media.  The article was entitled, JPMorgan To Refund Account Fees For 400,000 Credit Cards,” and apparently relied upon Chase’s spokesperson, Stephanie Jacobson, as a source.   Let’s take it from the top, relative to corrections; quoting from the article:

In January, Chase Card Services, a unit of New York-based JPMorgan, notified nearly half a million credit card customers that they would be subject to a $10- a-month service charge for keeping their account open.

Correction: The “$10-a-month service charge” is in fact one that “is a finance charge.”  Why do I correct this over and over, and over, again?  Because it is one of the main points of the entire debacle for account holders.  Since it is a “FINANCE CHARGE,” then Chase violated the previously promised promotional rates; this provided a basis for 12 class action lawsuits (plus 2 more that I have heard about through lead plaintiffs who have contacted me — just waiting on links to the suits). 

I am fairly certain that well before any of the class action lawsuits were filed, I may have been the first person to have made this point about the “FINANCE CHARGE” and the fact that it changed the promotional rate (indicating that Chase made a strategic error) in my letter to Chase Card Services CEO Gordon Smith, which was dated December 3, 2008 (immediately after my receipt of my own change in terms notice).

Relative to “for keeping their account open,” that may be technically correct, but it does not reflect the actual wording in the change in terms document in a manner that conveys the situation with adequate richness: “This charge is owed whether or not you use your account, and you agree to pay it when billed.”

Finally, Chase has continued to engage in what can only be described as an obstructionist campaign based upon an outright lie relative to this so-called “service charge” (a.k.a., “fee”) as described to members of the media.  According to the change in terms notice, Chase falsely stated: “Important: Your APRs will not be impacted by these changes” (Panel 1, Summary Section).  I’m afraid that one probably does not even need to be “smarter than a fifth grader” to grasp that adding a charge that “is a finance charge” does absolutely, positively, and certainly impact APRs; it makes them HIGHER.

Next quote: 

Chase also raised the minimum monthly payments for those customers from 2% to 5% of the account’s outstanding balance.

Correction:  There’s a little more to it than that.  Although any account holder may feel like this is “blackmail,” forcing him or her into switching to Chase’s premeditated option (designed to herd individuals into accepting higher interest rates, typically double the previous rate, e.g., from 3.99%-old to 7.99%-new), as non-lawyers and laypeople, they may not discern some of the finer points of legal language.  Thus, here is a passage from the class action lawsuit, DAVID M. SKAGGS, individually and on behalf of all others similarly situated, Plaintiff, v. CHASE BANK USA, N.A., Defendant, which explains Chase’s act in legal terms (p. 1, lines 16-21):

Chase reneged by placing a $10 per month finance charge on these accounts, and raising the minimum payment due each month.  Chase then uses its unilateral implementation of these onerous terms to coerce cardholders to agree to a higher rate of interest or to pay the loan balances in full.  3. In doing so, Chase consistently misrepresents the facts applicable to these accounts and violates the Truth in Lending Act.

Switching back to plain talk, Chase planned to bully account holders who could not make the higher monthly payments.  Especially in these hard economic times for individuals and families (and small business owners), Chase knew it had a powerful stick with which it could threaten account holders.  It had a lot of people at a tremendous disadvantage and it planned to plunder and pillage, even after accepting $25 billion in bail out money.  (Since this is a PG-rated site, I’ll not add the word that often accompanies “plunder and pillage,” that word being a form of sexual assault.) 

For instance, an account holder with a $20,000 balance (not an atypical debt for a small business owner) would go from paying $400 per month to $1,000 per month; the $600 per month increase may be just about the right amount to support a part-time employee, or pay the rent and utilities for a small business owner’s office.

Next quote: 

Jacobson said the decision to assess account fees at the rate of $120 a year applied to “less than one-half of one percent of our customers.” The credit card accounts in question, she said, carry low promotional interest rates and are tied to “a small percentage of customers that have made little progress in paying down these loans.”

Correction:  I have written about the defamatory nature of these statements made by Chase through its spokesperson(s).  However, “the accounts in question” were most certainly not all associated with individuals who “have made little progress in paying them off.”  Here is a previous post that I created after spending some time researching the Internet to determine if there were in fact other persons, who like me (as I discussed in response to a quote from me in the New York Times), paid more than the minimum — findings indicated numerous others. 

Secondly, the portrayal of these account holders in a negative light, by virtue of suggesting that their “progress” was in some way deficient relative to their loan agreements with Chase, was and is unconscionable, and damaging to the reputation of those account holders.  These account holders, all 400,000 of them (otherwise, they would have already been subjected to usurious 30-something percent rates) were meeting their obligations, have done nothing wrong, were not required to pay more than the minimum — even if that was the case, but many did pay more — and were previously praised as being among Chase’s “most Valued Cardmembers.” 

This inappropriate negative portrayal of good-paying account holders should come at a cost to Chase.  I for one, would like Chase to pay punitive damages and restore the good names of these good-paying account holders, all 400,000 of them, with a letter of apology published on the same newswires which it used to distribute the original misrepresentations and defamatory information. 

Further, a letter of correction should be sent to every credit bureau, for each of the 400,000 account holders (given three major credit bureaus, I estimate approximately 1.2 million letters), specifically noting that these account holders “made the required amount of progress that was indicated in each monthly statement, and therefore faithfully and fully met their obligations.”  Back to street language: “I’ll dare you Chase, insult the honor of these account holders” (since I am a college professor and the father of a teenager, I have the vocabulary to be even more colloquial: “Chase, you better say you’re sorry for dissin’ me and my peeps”).

Given that the “low promotional rates” to which Ms. Jacobson referred would have only been offered to good-paying account holders in the first place (with good to excellent credit — and that takes work on the part of account holders), who have in the interim fulfilled their payment obligations, Chase should be forced to make restitution as described above. 

Because I have now become a public figure, essentially forced into doing so as the only apparent means of protecting my family’s interests in this matter, personally, I would still NOT be satisfied should Chase merely send the aforementioned retractions.  The damage has been done, including tangible losses to my retirement account, from which I took an early distribution (incurring penalties and taxes as well as the loss of future retirement earnings) under the threat of higher monthly minimum payments to Chase.  I’m not the only one who has suffered money damages, which by the way, were associated universally with account holders who were doing all that they could do to protect their good reputations, respectively. 

Several site visitors have asked me privately, “what does this do to the lawsuits?”  While I am not an attorney, I would assert that a “Nevermind!” from Chase does even come close to undoing the damage it has wreaked upon 400,000 account holders.  I know my own sense of psychological as well as financial well being has been egregiously violated, and I would suggest that this is a common condition that has resulted from Chase’s actions.

Next quote:

“Our desire is to have these balances paid back in a reasonable period of time,” Jacobson said. “The minimum payment due will remain the 5% of their new balance.”

Correction: The backhanded implication of the above quote, consistent with the defamatory remarks, is that customers were not already paying their loans back as agreed, “in a reasonable period of time.”  Nevertheless, if Chase had specific ideas or requirements (i.e., “desires”) regarding a loan payoff period, at the very least it should have said so in its promotional messages. It should have provided payment terms in statements that were consistent with these promotional messages as well.  In other words, Chase set the minimum payment amount all along, and it has no right to gripe about account holders who met their obligations by paying the amount that was specified as being due as per their respective monthly statements.

Instead, Chase promoted a false impression of a “fixed APR Until the balance is paid in full” loan as a “Rate Reduction for our [Chase’s] most Valued Cardmembers,” and by originally setting payments at 2% of the balance, mislead customers into believing that these payment terms could be expected to continue.  Since it could not easily claim default on the part of individuals who were paying on time and subsequently engage in rate-jacking, Chase decided to try payment-jacking (again, this is also tied to bad faith and coerciveness).

One might note that no time period, whatsoever, was originally disclosed; and, whether from a legal or simply a practical point of view, such disclosure should be recognized as an obvious requirement so that a lender and borrower can communicate in connection with expressing mutual expectations. 

As just about anyone who can drive a car is aware, if one knows the speed at which he or she is traveling, then the time to arrival (ETA) at a destination with a known distance can be calculated.  Translated, this means that Chase knew when it lent money at a given rate of interest, that with payments set at 2% of the balance, accounts would be paid in full in a period of time that was easily calculable.  Thus, for the initial period of the loan, account holders were erroneously led to believe that there was a certain rate of repayment and time associated with these loans.  This illustrates a profound disclosure issue.

Further, noting that Chase has now, finally, indicated that “a reasonable amount of time” would be associated with payments at 5% of the balance per month (like stepping on the gas and accelerating from 40 mph to 100 mph), two questions would arise on the part of any consumer given the language quoted from the promotional offerings: 1) why (in the hell) didn’t Chase define “reasonable” in its original promotional messages?; and 2) if Chase had a specific (“reasonable”) time period in mind, then it is a basic premise of any loan to state as much in advance of providing that loan — hence, why didn’t Chase do so? (For example, car loans may typically be 48 to 60 months, and real estate loans may typically be 15 or 30 years.)

I remain astonished that Chase’s present statements ignore its initial failure to disclose its “desire” in a manner that was forthright.  Further, its failure to disclose its desires essentially necessitates a need for mind-reading on the part of account holders. I also would point out that these are individuals who were previously praised in promotional messages, but who have now for no reason of default have more recently been defamed as essentially, “slow paying laggards who deserved it” from Chase.

Next quote (apparently a portrayal of the author’s now incorrectly skewed viewpoint):

Chase’s decision to assess the monthly fees before retreating only months later illustrates the struggle among credit card lenders to wind down open accounts tied to risky borrowers.

Correction:  “Risky borrowers” exacerbates the damage inflicted by the initial defamatory portrayal (or at the very least, illustrates the result of Chase’s dissemination of misinformation by its spokesperson).  As should be very clear by this point in my discussion, we, the 400,000 who have been defamed, are not the “risky borrowers.”  We were selected for low promotional rates precisely because we were among the least risky borrowers.  We have paid on time and as agreed.  Perhaps the author of this article did not intend to “add insult to injury,” but by accepting what Chase has stated at face value and then providing further (inappropriate) justification to Chase’s misrepresentation, this is exactly what has occurred. 

Therefore, I would like a correction that adds proper clarification from the publication and the author.  I want to be respectful of the author as I can understand how this situation may have occurred.  However, at the same time, I must strongly object to the added insult resulting from the suggestion that we are “risky” or otherwise unworthy borrowers (who from a social justice point of view, somehow “deserved it” relative to what Chase has done).

Next quote:

“Customer satisfaction is important to us,” Jacobson said.

Correction:  ChangeInTerms.com is my primary means for providing customer feedback with regard to the credit card industry as a whole and its abusive treatment toward account holders.   

If the 400,000 number quoted by the media (and in the article’s headline) is accurate from Chase, then there are at least 399,999 individuals, plus me, who are by no means remotely close to being “satisfied” by Chase’s unprecedented act of aggression (which I intend to make into a “textbook study” of how NOT to treat or otherwise “satisfy” customers).  

I can guarantee that even though my wife does not have a Chase account that was associated with this present change in terms, given that “Chase Card Services Stole Christmas,” and a few years ago a supervisor also flatly told her that Chase did not care whether or not she kept two accounts of her own open, she’s not “satisfied,” either.  For the record, she did nothing wrong (perfect payment record, like me, and these 399,999 additional account holders).  I have mentioned this instance of complete dissatisfaction on the part of my wife in my correspondence with Chase, but I don’t see that it has shown any interest in addressing my her situation.

The class action lawsuits against Chase, in effect, also constitute a form of feedback regarding “satisfaction.”  Indeed, it would be an understatement to say that customers are anything less than outraged.  

An additional form of feedback includes the notoriety of being included in a petition launched by Consumers Union (publisher of Consumer Reports — a premier objective and independent evaluator of what may be good, bad, or in-between relative to product offerings and promotional claims), against this egregious action on the part of Chase.  The intended audience for the petition is the President of the United States.  I’d say that when an organization such as Consumers Union has gone so far as to specify Chase’s actions in a petition all the way to the President, that is a good indication that overwhelmingly, “We can’t get no, sa-tis-faction; though we try, and we try and we try and we try.”

In closing, I would add that the article should also mention Chase’s original representations before Congress in testimony describing “opt outs” as the means by which it treated customers “fairly” (given that this change in terms under discussion is missing any such “opt out” as was portrayed in that testimony). 

The author’s byline contains contact information.  Please help me emphasize the needed corrections as indicated above, along with any other insights you may wish to provide to the author of this inflammatory piece (keep in mind that the author may not have understood that Chase has engaged in an ongoing campaign to spread misinformation, and its executives lied before Congress about opt outs — be polite):

Marshall Eckblad, Dow Jones Newswires; 201-938-4306; marshall.eckblad@dowjones.com

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