Walter and Cheryl Barrer obtained a credit card with Chase in 2004 and accepted the cardmember agreement. In February 2005, Chase mailed a Change in Terms Notice to the Barrers that notified them of an increase in the annual percentage rate from 8.99 percent to 24.24 percent in certain events, including payment default and persistently late payments. The notice provided a right for the Barrers to reject these terms in writing, but they did not. In April 2005, the Barrers’ APR jumped to 24.24 percent. Chase claimed that it increased the rate because of information obtained from a credit agency about the Barrers being an increased credit risk, even though that condition was not listed in the notice as an event qualifying for a rate increase.

CASE QUESTIONS

1. Do Chase’s actions comply with the TILA? Why or why not?

2. Why shouldn’t the Barrers be liable for failing to reject the new terms?