Today, the United States Supreme Court invited the Solicitor General to file a brief expressing the Government’s position on Chase Bank USA, N.A.’s (“Chase”) cert petition with the following question presented:
When a creditor increases the periodic rate on a credit card account in response to a cardholder default, pursuant to a default rate term that was disclosed in the contract governing the account, does Regulation Z, 12 C.F.R. § 226.9(c), require the creditor to provide the cardholder with a change-in-terms notice even though the contractual terms governing the account have not changed?
The Ninth Circuit held that Regulation Z requires Chase to issue a notice, even though the new rates were based on consumer default. Judge Cudahy, sitting by designation from the Seventh Circuit, dissented.
Even though a decision in this case will likely not have a great impact on future cases because of the Credit CARD Act, it will have definitely impact many current pending cases. We will keep you apprised as to whether the Supreme Court grants the cert petition.