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Capital One is facing a nationwide consumer class action lawsuit alleging it misrepresented the interest-free grace period associated with its credit cards and instead charges interest on credit card accounts on transactions that are paid off by the billing period date.

Plaintiff Susan Dress filed the Capital One Credit Card class action lawsuit last week in Massachusetts federal court claiming that Capital One purposely makes their terms confusing to consumers and fails to tells them they can lose their grace period on all future transactions by failing to pay off their balance in full in a prior month.

Most consumers have an understanding that when making purchases with a credit card, they will be hit with interest charges on purchases if they do not pay for those purchases, in full, by the next billing statement’s due date. Basically, any reasonable consumer knows that if they pay for their purchases on time, they will avoid paying interest. However, according to the Capital One Credit Card class action lawsuit, Capital One credit card holders who pay off purchases in full are often shocked to find that they are still charged interest on their next month’s bill for those same purchases.

“Without notifying consumers, Capital One eliminates the grace period for all new purchases if a consumer does not pay off her entire statement balance in a given month. If a consumer leaves even $1 on her account balance after a billing period due date, Capital One eliminates the grace period for all subsequent new purchases—even for new purchases fully paid off by the next billing cycle’s due date,” the 18-page complaint states.

In other words, with a Capital One credit card, keeping a balance into the next billing cycle means there is no grace period on consumer purchases during that cycle. The card starts charging interest on purchases the day the consumer makes them. But Capital One never informs consumers of this, Dress says. The Capital One Credit Card class action lawsuit also points out that the company’s Credit Card Agreement states “we will not charge you interest on any new transactions…if you paid the total balance across all Segments of your Account in full by the due date on your Statement each month.”

Dress is seeking to represent a nationwide Class of all Capital One credit card account holders who were charged interest on amounts that were paid in full before the due date, along with a proposed Massachusetts subclass. She is asking the Court to award actual and punitive damages, as well as restitution of all interest charges paid to Capital One as a result of the deceptive and misleading interest-free grace period.

Dress and the proposed Class are represented by Patrick J. Sheehan of Whatley Kallas LLP; Nicolas A. Migliaccio and Jason S. Rathod of Migliaccio & Rathod LLP; Jeffrey Kaliel and Sophia Gold of Kaliel PLLC; and Kristi C. Kelly, Andrew J. Guzzo, and Casey S. Nash of Kelly & Crandall PLC.

The Capital One Credit Card Misleading Interest Fees Class Action Lawsuit is Susan Dress v. Capital One Bank (USA) N.A., Case No. 4:18-cv-40064, in the U.S. District Court for the District of Massachusetts.

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