JPMorgan loses court ruling over credit cards

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The U.S. Court of Appeals for the Ninth Circuit said the bank could not show it made "clear and conspicuous disclosure" of the annual percentage rates it was allowed to use, as required under the federal Truth in Lending Act, when it raised a customer's rate to 24.24 percent from 8.99 percent.

According to the opinion, Chase imposed the higher rate, which was "close to a non-preferred or default rate," on the plaintiffs Cheryl and Walter Barrer even though no event of default had occurred. It was only when the Barrers inquired that they learned the bank raised the rate because they had too many loans and accounts, a conclusion they did not dispute.

The appeals panel said the bank inserted a change-in-terms provision on pages 10 and 11 of the Barrers' card agreement, "five dense pages after the disclosure of the APR."

It said this was "buried too deeply in the fine print" for a reasonable cardholder to realize the bank could raise the APR for "any reason at all." The panel sent the case back to federal district court for further proceedings.

JPMorgan Chase did not immediately return a request for comment.

The decision was announced on the same day the U.S. Senate overwhelmingly approved a bill to curb sudden rate increases on credit cards. The House of Representatives approved a similar bill last month. President Barack Obama is expected to sign the measure into law later in May.

The case is Barrer v. Chase Bank USA, U.S. Court of Appeals for the Ninth Circuit, No. 07-35414.

(Reporting by Jonathan Stempel; Editing by Steve Orlofsky)