Capital One To Pay $10 Million To Settle APR Class Action

Capital One To Pay $10 Million To Settle APR Class Action

LOS ANGELES - (Mealey's) Capital One Bank NA USA has agreed to pay $10 million to resolve claims that it promoted its credit card services as offering low fixed annual percentage rates and then later abruptly increased them, according to a document the lead plaintiff in a class action filed in a California federal court Sept. 13 (Raquel Rubio v. Capital One Bank NA USA, No. 07-06766, C.D. Calif.). 

(Brief in support of motion for approval of settlement available. Document #88-120924-295B.) 

The settlement is subject to the approval of U.S. Judge Audrey B. Collins of the Central District of California. 

The $10 million represents nearly 40 percent of the more than $26 million in alleged damages to the proposed class and includes attorney fees and a payment to the lead plaintiff, according to lead plaintiff Raquel Rubio's brief in support of a motion for approval of the settlement. 

Settlement Details 

Rubio proposes a settlement class consisting of:  "All natural persons who have or had Capital One credit card accounts with billing addresses in California whose accounts are current, meaning they are not charged off or in bankruptcy status, as of the Effective Date, who opened an account with Capital One after October 18, 2003 in response to a solicitation describing any APR as 'fixed' in the table of information included in initial disclosures as required by federal law (the 'Schumer Box'), and whose fixed APR(s) were later increased for reasons other than default, and who did not opt out of the APR increase after receiving notice." 

"In light of the uncertainties of litigation, the value of the proposed settlement offer is certainly adequate," Rubio said in the brief.  "By any measure, that is a substantial recovery to class members, given the inherent risks of litigation." 

According to Rubio's second amended complaint, which she filed April 10, 2008, on behalf of herself and all others similarly situated, she received solicitation materials in February 2004 to open a Capital One credit card.  According to Rubio, the solicitation promised a 6.99 percent fixed APR that was not an introductory rate.  The solicitation listed three conditions under which the rate could increase, she said.  Rubio applied for and received the card, but three years later, Capital One increased the rate to 15.9 percent, even though none of three conditions in the solicitation had occurred, Rubio said. 

The plaintiffs are represented by Michael Louis Kelly, Behram V. Parekh and Joshua A. Fields of Kirtland & Packard in El Segundo, Calif.  Capital One is represented by Nancy R. Thomas and Sylvia Rivera in Los Angeles and James F. McCabe in San Francisco, all of Morrison & Foerster.

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