Consumer Law

Angry About 27.99% Credit Card Rate, Lawyer Refuses to Pay, Threatens Suit


In a move that will undoubtedly strike a sympathetic chord with other credit card users hit with hefty interest charges despite longtime records of timely monthly payments, a California trial lawyer is taking an unusual new legal approach to the issue.

Unless and until the Bank of America lowers his 27.99 percent annual interest rate on the card, he simply won’t pay, attorney Benjamin Pavone tells CBS News. And if the bank makes an adverse credit report as a result, he will sue.

The article doesn’t explain his legal theory for doing so, but Pavone says the bank raised his interest rate and lowered his credit limit without any advance warning or explanation, according to the CBS article.

Federal regulations, however, call for banks to give consumers a chance to opt out before raising credit card interest rates. Meanwhile, at the same time that banks are apparently making a practice of hitting good customers with record high interest rates on credit card balances, the institutions themselves are paying some of the lowest interest rates in decades to borrow the money they lend out.

“A lot of feedback coming into my office is these are people with good payment records. Excellent payment records,” says Pavone in an appearance on the The Early Show. “They’ve been paying consistently, and have paid for 10, 15, 20 years—in my case 13 years—there’s really no cause for it. The spread from 28 percent to what they’re paying, which is maybe a half percent to 1 percent, is simply opportunism.”

Pavone tells the ABA Journal that, in general, such “exorbitant” interest imposed by the card issuer conduct implicates a number of potential state-law causes of action including usury, breach of the covenant of good faith and fair dealing and what he describes as “various unfair business practice-type claims.”

Additionally, in his own case, because he got initially got his credit card through an MBNA/State Bar of California offer before it was transferred to the Bank of America, there may be a viable claim that the advertisement for the offer promised “a higher level of customer service than just ‘the credit card company will gouge you any chance they get,’ which is the current practice,” he writes in an e-mail today.

The CBS article doesn’t include any response from the bank, and a Bank of America representative couldn’t immediately be reached by the ABA Journal for comment.

Updated at 1:34 p.m. to include comment by Pavone to the ABA Journal.

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