Ben Pavone told Bank of America in a letter last week that he refuses to pay off his credit card debt until the bank lowers his interest rate. And, he added, if they try to ruin his credit, he'll sue 'em.
"They've got to have some kind of obligation to not totally extort the public," said Pavone.
The San Diego, Calif. attorney is angry about two things: his interest rate, which has gone up to 27.99 percent, and his credit limit, which has gone down to just above his balance. "I'm sure I'm going to be hit with penalties," he said.
Pavone said he got "squeezed for cash" and asked Bank of America to raise his credit limit in October. The bank responded with a two-page letter. The first page declined the request; the second told him his limit would be reduced from $32,100 to $30,400. Bank of America cited "economic trends" in both decisions.
"I consider your action an anticipatory repudiation of the contract and am treating you as in breach," he wrote in a Dec. 31 letter to the bank. "I am therefore not paying the money that is currently due on January 3, 2010 out of protest."
Pavone said he got the protest idea from Ann Minch, the Red Bluff, Calif. woman who launched a "debtors' revolt" via YouTube in September. Minch won imitators and also a reduced interest rate on her own card. Pavone, Minch et al are all asking the same question: Why is it fair for bailed-out banks to reward themselves with bonuses and at the same time to soak taxpayers who've done nothing wrong?
"For the record, I have a perfect payment history and I have a nearly perfect payment record on my credit," Pavone's letter continued. "I have no doubt that you will mark my credit in light of this default, but if you do, I will sue you. I am eager to argue to a court that your interest rates are unfair within the meaning of various state and federal statutes, and anxious to point out that you 'had' to cut my credit limit from $32,000 down to $30,000 at the same time you were borrowing billions from the federal government and paid your executive bonuses in full."
The letter concludes by asking the bank to reduce his rate to 10.99 percent, after noting that it would probably cost less to reduce the rate than to have to fight the suit.
Bank of America does not comment about individual customers. Regarding credit limits, a spokeswoman wrote, "In general, we monitor accounts for risk and may adjust customers' lines up or down as appropriate based on the risk profile and performance with us."
Ed Mierzwinski, program director for consumer advocacy group U.S. Public Interest Research Group, told HuffPost that Pavone's got the right idea -- it would be easier for the bank to cut a deal with Pavone than to deal with him in court, which is a distinct possibility since the bank abandoned mandatory arbitration in the fall.
"The banks respond to the squeaky wheel," wrote Mierzwinski in an email. "ANY consumer who complains has a better chance than those who do not."
As for the legal theory of Pavone's possible lawsuit, consumer law experts say he just might have a case. Pavone said a possible suit would allege unconscionability. When jacking up interest rates, credit card lenders typically provide notice and an opportunity for cardholders to refuse the higher rate and settle their accounts at the current rate -- nothing unconscionable about that. But maybe Bank of America breached good faith by reducing the limit to a level that would likely incur fees and damage Pavone's credit report.
"Banks have done really well figuring out ways to screw people without making themselves legally liable," said Ira Rheingold, director of the National Association of Consumer Advocates. "I think [the limit reduction] is another example of Bank of America's venality. Whether or not it's a successful lawsuit, I don't know. Whether I think it ought to be challenged -- absolutely."
Lawsuits against big banks are not totally unwinnable. In November a federal judge refused to dismiss a class-action claim against Chase filed by customers who said the bank acted in bad faith when it raised minimum monthly payments from 2 percent to 5 percent on fixed-rate cardholders.