NEW YORK (
) -- The Supreme Court decided on Monday that
followed the law in its practice of retroactively raising interest rates on consumers before the
implemented a new law banning the practice.
In a class-action lawsuit that began in 2004, lead plaintiff James McCoy said Chase had acted improperly by hiking his interest rate on existing and new balances without notifying him beforehand. A law, known as "Regulation Z," was implemented in 2009 to prevent banks from retroactive rate hikes and other practices that consumer advocates have characterized as abusive.
The lawsuit had moved its way through appeals courts for more than six years. Some decisions found Chase's actions legal because the terms were outlined in a contract McCoy had signed, but the most recent appeals court decision had allowed the suit to move forward.
In a unanimous opinion written by Justice Sonia Sotomayor, the Supreme Court had the final word - putting to rest any suggestion that Chase and its competitors might be dogged by rate-hike-related litigation going forward.
"At the time of the transactions at issue, Regulation Z did not re-quire Chase to provide McCoy with a change-in-terms notice before implementing the agreement term allowing it to raise his interest rate, up to a pre-set maximum, following delinquency or default," says the decision, in Chase Bank USA v. McCoy, No. 09-329.
-- Written by Lauren Tara LaCapra in New York
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