July 11, 2012
In the Media
Holding All the Cards
July 11, 2012
Has your credit-card company ever overcharged you? Maybe you notice
your credit card’s interest rate is higher than your state allows.
Or perhaps your credit-card company is miscalculating your daily
balance. It might not be a big error, but every month it costs you
a little money. Suppose that after you complain, the credit-card
company refuses to refund the money. You could sue, but given the
amount at stake, it probably wouldn’t be worth the legal expense.
But then you realize that lots of other customers were probably
overcharged too. Bringing a class-action suit would not only cover
the expenses of litigation, but could also return some money to the
injured consumers, including you.
Unfortunately, you probably can’t bring the case as a class action.
Many—likely most—credit-card contracts don’t allow customers to sue
in court. They require disputes to be settled by arbitration. Never
mind that the contract—written by the card issuer—may choose the
arbitration service. An even bigger problem is that last year the
Supreme Court ruled that if the credit-card agreement says you
can’t bring a class action, you can’t—even if you live in a state
that says credit-card contracts can’t do that (AT&T
Mobility v. Concepcion).
And if your credit-card company is charging more interest than your
state allows? You’re out of luck, even if you have never used the
card in any other state. That’s because the bank subsidiary that
issued the credit card is most likely based in a state like
Delaware that allows credit-card issuers considerable latitude in
the interest they charge. According to a federal law called the
exportation doctrine, credit-card companies can use the law of the
state where they’re incorporated, rather than the states of
residence of their customers, to determine allowable interest