Los Angeles, CA: A federal credit card fraud class action lawsuit has been filed against Capital One alleging the credit card company tricks cardholders into accepting a "0% balance transfer"offer that worsens their financial situations instead of providing them with a "chance to save."
Lead Plaintiff Priscilla Barton alleges that Capital One makes "deceptive representations and omissions surrounding its 0% balance transfer offers,"such as eliminating the 25-day interest free grace period that Capital One promises customers will have to pay their "new balance." Specifically, the lawsuit states, "Numerous times every year, Capital One solicits its cardholder base to take 0% balance transfers Capital One markets the balance transfers as a 'chance to save' -- a means for the cardholder to pay off higher interest loans owed to other creditors. Capital One promises that these balance transfers will carry 0% interest for six or twelve months. To accept a balance transfer offer, all a cardholder has to do is use one of the 'convenience checks' which come attached to the offer. Capital One promises that it will segregate the transferred balance from other segments of the cardholder's account."
However, the lawsuit claims, unbeknownst to consumers, "once a cardholder accepts Capital One' '0% interest' balance transfer offer, Capital one unilaterally, and in breach of the cardholder agreement, eliminates the grace period and begins charging interest on all new purchases from the date of the balance transfer forward. "
The lawsuit further claims that Capital One does not tell customers that it will eliminate the grace period and charge them high interest rates instead, nor do they disclose that they only way to avoid interest charges on any new purchases once the 0% balance transfer offer is accepted, is to pay, in full, the cost of the new purchases plus the balance transfer amount. And, this payment of the outstanding balance must be made in the same month the balance transfer takes place, despite the fact that the promotional period on the 0% percent offer is for 6 or 12 months.
The Capital One class action lawsuit, entitled Priscilla Barton v. Capital One Bank, Case No. 12-cv-5412, U.S. District Court, Northern District of California, is seeking restitution and compensatory and statutory damages for alleged breach of contract, breach of faith, unfair competition, and violations of the federal Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) and the California Unfair Competition Law (UCL). It is also seeking an injunction barring Capital One from further deceptive marketing regarding its 0% balance transfer offer.
Plaintiffs are represented by Hagens Berman Sobol Shapiro.