Raising credit card interest rates on customers without telling them has gotten Capital One in trouble, again. Capital One was being sued for breaking the Truth in Lending Act earlier this year, but it was dismissed by a judge. The 9th Circuit thought the lawsuit should be reinstated on July 22. New credit card rules enacted earlier this year make arbitrary rate of interest increases illegal.
Capital One class action suit
Deceptive lending and being unfair competition are the reasons for the Capital One class action suit as they’re said to change interest rates without “clear and conspicuous” warnings first. The Courthouse News Service reports that after having the credit card for 3 and a half years and complying with the terms of the contract, lead plaintiff Raquel Rubio claimed her credit card interest rate all of a sudden more than doubled.
Capital One can lie
Rubio sued Capital one for being unfair competition and for not holding true to the Truth in Lending act. A federal judge dismissed the class action, ruling that Capital One satisfies its obligation to be clear and truthful by stating that the rates and fees were subject to change. Capital One can “amend or change any part of your Agreement, including periodic rates and other charges, or add or remove requirements … at any time.”
Capital One uses fine print
The Capital One class action suit was brought back with a simple appeal. ”Fixed” can’t be used by Capital One if the rates change as outlined by a 3 judge panel. Reuters reports that Rubio had accepted a February 2004 mail solicitation from Capital One that offered a credit card with a 6.99 percent rate on balance transfers and purchases. In 10 point type in this offer, it explained that under certain circumstances, the rate of interest could possibly be raised. But in eight-point type on the exact same page, it also said terms were “subject to change,” and a cardholder agreement that Rubio received the next month said Capital One could “amend or change any part” of her agreement “at any time.”. Although none of the circumstances had happened, Rubio’s Capital One rate went in August 2007 to 15.99 percent.
More info on this topic
Courthouse News Service
courthousenews.com/2010/07/22/29062.htm
Reuters
reuters.com/article/idUSN2116752120100721
