Seattle, WA: A lawsuit seeking class action status has been filed alleging Capital One (NYSE:COF)
misrepresented its "transfer balance"program, resulting in higher-than-expected interest rates for consumers.
The case, filed June 9, 2011, in the United States District Court for the Eastern District of Michigan, alleges that Capital One deceived cardholders by claiming that a cash advance obtained through the company' transfer balance program would include a 0 percent Annual Percentage Rate ("APR") for one year. The company also allegedly promised that credit balances on regular monthly purchases ("purchase balances") would incur no interest as long as the balance was paid within 25 days.
However, according to the complaint, cardholders who took advantage of the transfer balance program were charged interest rates exceeding 13 percent on their purchase balances, even if the balance was paid on time, because payments were applied to the transfer balance rather than to the purchase balance. The lawsuit alleges that Capital One' actions constitute a breach of contract and the duty of good faith and fair dealing, in addition to violations of the Virginia Consumer Protection Act and the Michigan Consumer Protection Act. The case also argues that Capital One received unjust enrichment through the alleged scheme.
The case asks the court to declare Capital One' acts a breach of contract and award plaintiffs damages.
