Chemical Bank Found in Violation of '68 Consumer Act
Press Release
June 21, 1971

Cite this item
-
Press Releases, Loose Pages. Chemical Bank Found in Violation of '68 Consumer Act, 1971. 2ac228cc-bd92-ee11-be37-00224827e97b. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/6fd34168-0d1b-491c-90cc-62166a567a9c/chemical-bank-found-in-violation-of-68-consumer-act. Accessed June 13, 2025.
Copied!
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