Plaintiff loses credit card lawsuit

WASHINGTON - The U.S. Supreme Court says it was legal for a credit card company to increase the interest rate on a man's card without telling him, although the law has now been changed to require just that.

The high court on Monday ruled for Chase Bank USA and against James A. McCoy.

Although the law has been amended, the case had been closely watched because credit card companies could have faced litigation under the previous version of the rule known as Regulation Z, according to Lawyers Weekly.

McCoy sued in a California court before the law change saying that Chase increased his interest rate due to his delinquency or default, and applied that increase retroactively. He says credit card regulations make that illegal because Chase did not notify him until after the increase went into effect.

At the time, Regulation Z required creditors to disclose the circumstances under which rate hikes would be imposed, and to give notice at least 15 days before any rate increase.

Chase argued that a disclosure given to the debtor stated that the rate would increase if payments were missed, and therefore both regulations were satisfied.

A lower court had thrown out his lawsuit. Justice Sonia Sotomayor agreed, saying the Federal Reserve Board's interpretation of the regulations said Chase did not have to inform him of the rate increase.

Congress changed the law in 2009 to require credit card companies to give a 45-day notice before raising interest rates.