Doctor of Credit (H/T) reported yesterday that there is a class action lawsuit against Chase. The lawsuit is about adverse action taken against certain prospective credit card applicants. Adverse action is when a bank lets you know why you were denied for a credit card, loan, mortgage, or other way to borrow money.
Anyone who received a letter from Chase between January 28, 2014 and November 22, 2019 is eligible to file a claim. However, letters must state either a “previous unsatisfactory relationship with this bank” or “previous unsatisfactory relationship with us or one of our affiliates” as the only reason for Chase taking adverse action related to a credit card account.
Those who were affected received a notice in the mail with a Claim ID. You can enter the Claim ID at the lawsuit website to join. However, you can also join without having a notice or a Claim ID.
Doctor of Credit also states that you should join if Chase shut down your all your cards. They appear to be implying that churners who had their accounts shut down should also join.
What Does the Law Say?
The ECOA prevents discrimination against credit applicants from lenders based on several criteria, according to Justice.gov (H/T). These include religion, sex, ethnicity, age, marital status, or national origin. And one of the requirements is that lenders must provide a specific reason why they are denying an applicant credit.
The lawsuit alleges that Chase has failed to do so:
The lawsuit alleges that Chase Bank USA violated the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq. requirement to provide the specific reason(s) for taking an adverse action on a credit application by giving “previous unsatisfactory relationship with this bank” or “previous unsatisfactory relationship with us or one of our affiliates” as the only reason for taking an adverse action in connection with a credit card account. Chase denies that its actions violated the law, and no court or other entity has made any judgment or other determination that Chase violated the law.
A settlement has been proposed in the class action lawsuit pending in the United States District Court for the Northern District of California styled Chen v. Chase Bank USA, N.A. et al., Civil Case No. 3:19-cv-01082 (JSC).
How Much Can I Get?
The deadline to join the lawsuit is April 28, 2020 and the final approval hearing is on June 25, 2020. Estimated payments are $148 per person based on a projected 7% claims rate. However, they might be much less if there are more claims than expected.
Chase has agreed to pay $244,659 under the settlement for:
- Payments to Settlement Class Members (estimated at $187,659)
- Notice and Administration costs (estimated at $52,000)
- An incentive award to the Settlement Class Representative of up to $5,000
Plus, Chase has also agreed to pay court-approved attorneys’ fees and expenses of up to $185,000 separately. They also agreed to stop the challenged practices for five years.
In return, Settlement Class Members who include themselves will release Chase and related parties from certain claims as described in the Settlement Agreement. Settlement Class Members will also be paid within 27 days after the final court approval and all rights to appeal or review are exhausted or resolved in favor of the Settlement.
Joining this lawsuit could be a great way to get some revenge on Chase if you meet the criteria. It can also be a great way to make some extra money.
Nonetheless, this lawsuit should be interesting because it has the potential to set a precedent among lenders. This is especially true if other banks have cited the same reasons as Chase as the only reasons for adverse action.
The final day to apply is April 28, 2020. And the final approval hearing is on June 25, 2020.