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Chase Bank Settles Credit Card Lawsuit [08/20/2006]
Chevy Chase Bank has settled a seven-year-old class-action lawsuit that could affect hundreds of thousands of credit card holders who say they were charged late fees and excessive interest rates that were not part of their agreements with the bank.

The bank agreed to pay $16.1 million and repair any damages to customers' credit history. A court-appointed firm must now try to locate the customers, many of whom have moved since the problems surfaced more than 10 years ago, according to the settlement in Baltimore City Circuit Court.

The case involved Visa and MasterCard deals advertised by Chevy Chase in 1996 that promised an interest-rate ceiling of 24 percent, according to the plaintiffs' attorneys. About 1 million customers, many of whom already had credit problems, applied for the card, but some complained that their rates spiked to 30 percent.

The plaintiffs also charged that the bank imposed higher fees for late payments or for going over a credit limit than were part of the initial agreement.

"The energy from actual consumers about his case was remarkable from a very early stage," said a staff attorney with District-based Trial Lawyers for Public Justice, the group that represented the plaintiffs.

He said some customers are still having problems buying a car or house, and that others still complain of being hassled by debt collectors. Payments to some consumers could be in the thousands of dollars, an attorney estimated.

About a quarter of the $16 million settlement will go to attorney's fees, and another $1 million is likely to go toward the cost of locating those affected by the charges. The firm in charge of locating the customers will have access to Chevy Chase Bank records, but it is up to customers to contact Poorman-Douglas Corp., the court-appointed settlement administrator.

Bland said the group would be setting up a toll-free number and a Web site, but he did not have details. Those who have a claim have 90 days to get in touch with the administrator.

"There's a good chance for the consumer that even though they could get refunds, we won't be able to get to them after all these years," an attorney handling the case said.

Any money not distributed to plaintiffs will go to nonprofit groups chosen by the plaintiffs' lawyers and Chevy Chase.

"There's so many barriers to getting the relief to customers," said a staff attorney with the National Consumer Law Center, based in Boston, which was an adviser on the case. "The fact that these cardholders are getting any sort of cash in their pockets for this is pretty good."

The lawsuit settles a 7 year lawsuit alleging cardholders were charged late fees and excessive interest rates.

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