Chase lawsuit by credit card holder eyes ‘right to cancel’ in credit card reform

Here's the scoop:

A lawsuit by a former credit card customer against JPMorgan Chase is shining a light on an expanded provision of credit card reform laws set for full compliance Feb. 22: the right of a cardholder to cancel his card agreement if the interest rate is raised on future transactions.

According to a report by Reuters, former card customer Barry Woldman alleged that Chase, the largest credit card issuer in the nation, told customers they could “opt out” of rate hikes by closing their accounts.

But Chase raised the rate on the balance he owed even after he exercised his right to cancel, alleges the lawsuit seeking class-action status and filed in the U.S. District Court in Chicago.
In some cases, including Woldman’s, Chase hiked rates on outstanding balances of closed accounts from 11.99 percent in October to 17.99 percent in November, according to the lawsuit. Woldman has an outstanding account balance of about $16,000, the lawsuit said.

Under credit card reform, card issuers can take certain actions on a customer that exercises the “right to cancel.” They can increase the monthly payment, subject to certain limitations — requiring the balance to be paid off in five years. Or they can double the percentage of the balance used to calculate the minimum payment — which will result in faster repayment than under the terms of the account, according to the Federal Reserve.