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Credit card contracts are by nature confusing, but some of them are down-right infuriating. How can a credit card company advertise a “fixed” rate but also claim it’s “subject to change” at any time? That was the question posed in a lawsuit against Capital One that was originally dismissed. A recent 9th Circuit ruling, however, has reinstated the lawsuit and has ordered Capital One to defend the credit card APR class action lawsuit.
The class action lawsuit accuses Capital One of unfair competition and deceptive lending practices over its practice of raising credit card APRs without giving consumers “clear and conspicuous” warnings. The lead plaintiff in the case claims she was offered a Capital One MasterCard in 2004 with a “fixed” APR of 6.99% that could only go up under three conditions: if she failed to make a payment, went over her limit, or had a payment returned. The plaintiff claims that even though none of the triggering conditions occurred, her APR shot up to 15.9% after three-and-a-half years.
A federal judge originally dismissed the class action lawsuit on the grounds that Capital One satisfied its obligation to be clear and truthful by stating that it reserved the right to “amend or change any part of your Agreement, including periodic rates and other charges, or add or remove requirements…at any time.” A review panel reinstated the lawsuit, however, ruling that Capital One can’t represent that its credit card rates are “fixed” if they really aren’t.
In a partial dissent, the judge in the ruling said the same thing on every consumer’s mind: How can there be a “clear and conspicuous” disclosure that the APR could be raised, when the solicitation advertises a “fixed rate of 6.99%” and on the same page says the rates and fees are “subject to change at any time”?
“Consumers were being misled by having the word ‘fixed’ in their agreements, when the card company could change the terms at will,” said the plaintiff’s lawyer. “This is a significant victory, and is a significant issue for a card industry defending other lawsuits like this.”
A copy of the Capital One APR Class Action Lawsuit can be read here.
Updated August 18th, 2010
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3 thoughts onCapital One APR Lawsuit Reinstated
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How can we get a lawsuit like this in Illinois? I also had a capital one credit card with ‘fixed’ 8.99 apr which went up to 17.99% in 2009. I have since paid off the account but would like to get back at Capital One for the wrong they did. I just got a check from Chase for what they did to my minimum payment. I was the same from Capital One.