* Court says bank's card fee disclosure inadequate
* Ruling comes as Senate votes to tighten card rules
(Adds details, JPMorgan Chase comment, byline)
By Jonathan Stempel
NEW YORK, May 19 A federal appeals court
reinstated a claim by a JPMorgan Chase & Co (JPM.N) credit card
holder accusing the bank of failing to properly disclose risk
factors that allow it to suddenly raise rates.
The U.S. Court of Appeals for the Ninth Circuit said the
bank failed to make "clear and conspicuous disclosure" of the
annual percentage rates it could impose, as required under the
federal Truth in Lending Act, by burying the reason for an
increase in the fine print of a cardholder agreement.
According to a three-judge panel, Chase had been charging
Cheryl and Walter Barrer an 8.99 percent annual rate, when the
amount suddenly "skyrocketed" to 24.24 percent, a level that
was "close to a non-preferred or default rate."
Chase would maintain that it raised the rate after learning
from a credit agency that the Barrers had too many loans and
accounts, a conclusion they did not dispute.
But Judge Diarmuid O'Scannlain, an appointee of President
Ronald Reagan, wrote that Chase's justification for the rate
increase appeared on pages 10 and 11 of the Barrers' card
agreement, "five dense pages after the disclosure of the APR."
He said this was "buried too deeply in the fine print" for
a reasonable cardholder to realize the bank could raise the APR
not just for events of default, but for "any reason at all."
The panel returned the case to federal district court in
Oregon, which had dismissed the Barrers' claim, for further
Chase spokeswoman Stephanie Jacobson said the New
York-based bank does not comment on pending litigation.
The ruling 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. [IID;N19435282]
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 and