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Credit card giant Chase Bank will stop charging its customers a controversial monthly fee and will refund more than $4 million to cardholders, under an agreement announced this week by New York's Attorney General.
Chase had been charging more than 180,000 credit card holders the monthly "service fee" of $10 since January 2009. As part of the agreement announced this week by New York Attorney General Andrew M. Cuomo, Chase will stop imposing the monthly fee and will refund more than $4 million to customers who have paid the charge.
There is nothing illegal about banks charging monthly or annual fees to credit card users, but the federal Truth In Lending Act requires that these fees be spelled out up front in cardholder agreements and other materials. The problem with Chase's introduction of the $10 monthly fee, from the perspective of Attorney General Cuomo's office, is that it was imposed unilaterally on cardholders after they had opened accounts with Chase based on more favorable terms stated in promotional materials.
In a Press Release issued from Cuomo's office, the New York Attorney General declares: "My office will not sit back and allow banks to promise one thing in its solicitations and agreements with consumers, and then when times get tough, change the deal, leaving consumers holding the bag. Truth-in-lending laws prohibit this very conduct. I am glad that Chase has now reconsidered its ill-advised decision and will now live up to the terms it originally offered and agreed to."