What do you get when you combine a lender hemorrhaging money, 300,000 angry consumers, an unpopular monthly "fee" and 12 law firms? Simple, you get Chase Credit Card Services getting sued by what seems like every law firm east of the Mississippi -- and some to its west.
In November 2008, Chase sent letters to a great number of their cardholders notifying them of a new $10 monthly fee that would become effective in January 2009. They also increased the minimum monthly payment requirement from 2 percent of outstanding balances to 5 percent.
One of the issues that seems to be universally missing from each of the lawsuits is a credit damage claim. The Chase customers who received the notice of the monthly fee, which is actually a finance charge, were given the option to close their account to avoid the fee. The consumers who opted to close the account to avoid the fee, almost at Chase's suggestion, possibly lowered their credit scores because of the loss of available credit. This can lead to an increase in credit utilization, which is a very important component of credit scoring models.
John Ulzheimer is the President of Consumer Education at Credit.com and a Contributor to CNBC's On The Money. You can learn more about John at www.CreditExpertWitness.com.