Capital One sued once again for deceptive interest rate increases

Capital One corporate signage

The Capital One class action lawsuit, revived on appeal, accuses the credit card company of deceptive lending and unfair competition. Flickr photo.

Raising credit card interest rates on customers without telling them has gotten Capital One in trouble, again. A class action lawsuit accusing Capital One of violating the Truth in Lending Act by raising credit card interest rates without warning was dismissed by a federal judge earlier. But the 9th Circuit reinstated the Capital one class action lawsuit July 22. New credit card rules enacted earlier this year make arbitrary interest rate increases illegal.

Capital One class action lawsuit

The Capital One class action lawsuit accuses the credit card company of unfair competition and deceptive lending for raising  credit card interest rates without giving consumers “clear and conspicuous” warnings. The Courthouse News Service reports that after having the credit card for three and a half years and complying with the terms of the contract, lead plaintiff Raquel Rubio claimed her credit card interest rate suddenly more than doubled.

Capital One reserves the right to deceive you

Rubio sued Capital One for breach of contract, violation of the Truth In Lending Act and unfair competition. A federal judge dismissed the class action, ruling that Capital One satisfies its obligation to be clear and truthful by stating that the rates and fees were subject to change. Capital One 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.”

Capital One buries deception in fine print

The Capital One class action lawsuit was revived on appeal. A three-judge panel ruled that Capital One can’t represent that the rates are “fixed” if they are not. Reuters reports that Rubio had accepted a February 2004 mail solicitation from Capital One that offered a credit card with a 6.99 percent rate on balance transfers and purchases. The solicitation included a required table that said in 10-point type that the rate could rise if Rubio missed a payment, exceeded her credit limit or had a payment returned. But in eight-point type on the same page, it also said terms were “subject to change,” and a cardholder agreement that Rubio received the next month said Capital One could “amend or change any part” of her agreement “at any time.” Capital One raised Rubio’s rate in August 2007 to 15.99 percent though she had not triggered any of the conditions warranting a hike.

Other recent posts by bryanh