Chase Bank Class Action Challenges Cryptocurrency Purchase Fees

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Chase Bank USA NA has been hit with a class action lawsuit alleging it improperly charges cash advance fees and/or cash advance interest charges when its credit card holders purchase cryptocurrency.

“In recent years, so-called ‘cryptocurrencies’ such as Bitcoin, Litecoin, and Etherium have gained public attention for their potential technological applications to the future of business and finance,” the Chase Bank cryptocurrency class action lawsuit states.

Plaintiff Brady Tucker claims that a growing number of consumers are considering cryptocurrencies (or “cryptos”) to be the future of money. As of now, cryptocurrency is not money; rather, cryptocurrency is a technology.

According to the Chase Bank class action lawsuit, cryptocurrency is not created by any government or financial institution and is not recognized as legal tender in any domestic or foreign jurisdiction.

“Nonetheless, many consumers have come to view cryptos as the future of money, or at the very least, the future of financial technology,” the Chase Bank cryptocurrency class action lawsuit alleges. “For that reason, some consumers have come to ascribe tremendous economic value to owning cryptos.”

The Chase Bank class action lawsuit claims a website called www.Coinbase.com serves as one of the largest U.S. cryptocurrency exchanges. Coinbase reportedly allows consumers to purchase cryptocurrency online with their personal credit cards.

In the last few years, major banks including Chase Bank allowed credit card holders to purchase cryptocurrency, and simply designated the transaction as an ordinary credit card purchase, the cryptocurrency class action lawsuit says.

“But beginning in January 2018, Chase decided to do something very different,” the Chase Bank class action lawsuit alleges. “Chase began treating all its customers’ crypto purchases not as ordinary credit card ‘Purchases’ — as Chase had for years — but instead as ‘Cash Advances’ from Chase to the credit cardholder.”

The plaintiff says Chase failed to provide notice to its cardholders that cryptocurrencies would be treated as cash advance. Tucker argues that consumers purposefully use their credit cards to purchase cryptocurrency because it avoids the need for days of processing time typically required with purchases made using a bank account number.

“As a result, in and after late January 2018, Plaintiff and the Class simply continued to do what they had been doing for years: making routine crypto purchases via Coinbase and other merchants using their Chase credit cards,” the Chase Bank cryptocurrency class action lawsuit says.

“Unbeknownst to Class members, however, they were now taking out personal cash loans from Chase, complete with new fees and sky-high interest rates (up to 30% annually).”

According to the Chase Bank class action lawsuit, these charges began accruing on the transaction date rather than at the end of the billing period as is typical for an ordinary purchase.

Tucker says he and other putative Class Members believed they could pay off their cryptocurrency purchases before their credit card payments were due and avoid any finance charges. However, he says he and others were “duped.”

“Chase silently smacked them with instant cash advance fees, plus much higher interest rates than normal, and left them without any recourse,” the Chase cryptocurrency class action lawsuit says.

The Chase Bank cryptocurrency class action lawsuit was filed on behalf of Tucker and other people in the U.S. who purchased cryptocurrency from Coinbase or other cryptocurrency merchants, and who incurred cash advance fees and/or cash advance interest charges on credit cards issued by Chase Bank.

Tucker is represented by David J. Harris Jr. of Finkelstein & Krinsk LLP.

The Chase Cryptocurrency Fee Class Action Lawsuit is Brady Tucker v. Chase Bank USA NA, Case No. 1:18-cv-03155, in the U.S. District Court for the Southern District of New York.