Bank Settles Class Action Alleging UDAAP Violations for Credit Card Practices

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Parties in a putative class action alleging that defendant, a bank, mislead consumers and failed to properly apply customer payments to its credit cardholders have reached a settlement. Plaintiffs alleged that defendant misled consumers about the way in which it applied credit card payments to promotional purchases. According to plaintiffs, defendant engaged in deceptive and unfair business practices by marketing promotional reward card purchases as “interest free”, but charged California credit cardholders interest and fees for those purchases. Plaintiff filed suit on behalf of a class of California credit cardholders alleging violation of the California Business and Professions Code, fraud, and unjust enrichment, among other allegations. The parties engaged in mediation and emerged with a tentative settlement. The terms of the settlement provide for $5.5 million in cash benefits to plaintiffs. On June 2, 2014, plaintiffs will move the court for preliminary approval of a settlement between defendant and plaintiffs.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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