Chemical Bank Found in Violation of '68 Consumer Act

    PressHeleaseB See 

JUNE 21, 1971 

FOR IMMEDIATE RELEASE 

CHEMICAL BANK FOUND IN VIOLATION 

OF '68 CONSUMER ACT 

NEW YORK, N.Y.---The NAACP Legal Defense and Educational 

Fund, Inc. (LDF) has received a decision from the U.S. District 

Court for the Southern District of New York which found Chemical 

Bank in violation of the 1968 Consumer Credit Protection Act, 

widely known as the Truth-in-Lending Act, for failing to disclose 

the “nominal annual percentage rate" -- its annual finance charge 

-- on monthly statements to its Master Charge customers from July, 

1969, the effective date of the Act, until December, 1969. 

The suit against Chemical Bank was brought as a class action 

in September, 1969 by Michael Ratner, then a Columbia Law School 

student, Ratner received the assistance of the Legal Defense 

Fund -- an organization long concerned with consumer protection -- 

to fight his case. 

Still to be decided by the court is one extremely important 

question. The court must determine whether or not the class 

action suit is appropriate (i.e. whether or not it was proper for 

Ratner to bring the suit on behalf of himself and all other 

Chemical Bank Master Charge customers, some 132,233 individuals, 

who received the omissive statements. 

If so, damages as prescribed by the Act -- not less than $100 

nor more than $1,000 per person -- must be paid to all plaintiffs. 

(More) 

NAACP Legal Defense and Education Fund, Inc. | 10 Columbus Circle | New York, N.Y. 10019 | (212) 586-8397 

Hon. Francis E. Rivers - President Jack Greenberg - Director-Counsel 



CHEMICAL BANK FOUND 

IN VIOLATION OF '68 

CONSUMER ACT 

PAGE TWO 

If this decision goes against Chemical Bank, the institution 

could be forced to pay out some $13,223,000 in damages, assuming 

the minimum fine is imposed. 

In his summary decision, dated June 16, Judge M. E. Frankel 

gave great weight to the intent of the Act which was designed to 

give consumers an opportunity to "shop around” and compare the 

various prices of credit before deciding to use any. The Act 

stipulates that both the "periodic" finance charge -- in this 

case monthly charge -- as well as the annual charge be shown on 

all statements to credit customers. 

One of the bank's principal arguments was that no interest 

had accrued in Ratner's account and that, since no annual interest 

charge was "applicable" at the time he filed suit, the bank's 

failure to divulge its annual rate (18%) was not in violation of 

the Act. However, were this the case, no Chemical Bank Master 

Charge card customer would be advised of the bank's annual rate 

until after he had accepted credit. 

Chemical Bank also put forth.a "good faith defense," claiming 

that it relied upon the advice of its counsel in interpreting the 

Act and in deciding not to disclose its annual rates. 

On this matter the court said "It is undisputed that 

defendant carefully, deliberately - intentionally - omitted 

the disclosure in question. That defendant, in this court's view, 

mistook the law does not make its action any less intentional." 

According to attorney Eric Schnapper of the Legal Defense 

Fund, the case will be continued on June 28 to decide the remaining 

issue. 

2305 

For further information: Eric Schnapper or Sandy O'Gorman 

586-8397