Chase Cancels Payment Protector Plan, Leaving N.C. Woman With $38K Debt

PHOTO: Chase signChris McGrath/Getty Images
A sign on the front of a Chase Bank ATM in New York is shown in this Oct. 14, 2009 photo.

Dorothy Cross, 95, enrolled in a plan where she paid a small percentage of her monthly credit card balance to Chase with the expectation that once she died, her estate would not be responsible for the $38,000 balance she accrued over the last several years.

She enrolled in Chase' Payment Protector plan, which functions as a term plan and not like insurance. But Chase is ceasing the plan on May 31, 2014, explaining that it was "aiming to simplify the set of products and services we offer customers."

Cross, of Charlotte, N.C., is a retired school teacher who enrolled in the program around 2007 and paid less than one percent of her credit card balance as a monthly fee. She paid over $16,000 in fee payments, but will not longer have the benefit of the program, as first reported by the Los Angeles Times.

In the event of the customer's death, the plan may cancel the account balance, up to the lifetime maximum benefit of $25,000.

But with the cancellation of the plan, Emory Cross, her son, said after his mother dies, her estate will be responsible for her balance of about $38,000 from three Chase cards, which she has stopped using for the last three years but for which she continues to make payments.

"She would have not used the cards if she had known she would not have the plan," Cross, 70, said.

Paul Hartwick, spokesman for Chase, said he could not comment on an individual customer's situation, but that the bank is working with Cross. The company declined to disclose how many people are enrolled in the plan. But he said Chase has about 50 million credit card customers overall.

Like a term plan, such as auto, home or term life insurance, Hartwick explains that the plan provides point-in-time coverage.

"When either party decides to end the policy, there are no benefits or refunds," he explained.

Chase reached a $20 million settlement with customers who said they were inadvertently enrolled in the plan and stuck with monthly fees, but the company did not admit to any wrongdoing.

Cross has tried to look for options since she was notified of the plan cancellation, but her son in Cumming, Ga. said life insurance companies will not write policies for people who are the age of his mother, regardless that she is in good health.

"She's just scared to death she will pass away after May 31 [2014]," her son said. "She's certainly in that mindset at the moment. She's not doing well at all. We hope at the very least, Chase will allow her to stay in the program, continue to pay premiums and basically leave her alone at the least."

Chase informed Payment Protector customers in May 2013 that it would be ending the program in a year.

Chase said that "to ease the transition," customers were provided with 12 months of the plan at no cost.

"We believe one year's notice and 12 months of fee-free coverage gives customers time to evaluate their options and make any decisions based on their individual needs," Hartwick said in a statement.

Emory Cross filed a complaint with the Consumer Financial Protection Bureau on Sunday night. On Tuesday, a Chase representative called to say they received the complaint from the bureau and that the case was assigned to someone. But Cross said he hasn't heard from Chase since then.

He said his mother doesn't plan to litigate the matter.

"My father who passed away several years ago and was an attorney," he said. "He used to tell me, 'Don't litigate with someone with more money than you do'."

But Emory Cross said he and his mother might change their mind for a class action lawsuit.

Chase Payment Protector is described as an "optional plan that may help customers ease financial hardships by suspending minimum monthly payments and waiving monthly interest and plan fees on an account if a covered person experiences a qualifying event." These events include involuntary unemployment, hospitalization or disability, life events like marriage, and natural disasters.

Customers have until July 31, 2014 to notify Chase of a benefit request for any qualifying events that occur prior to June 1 of next year.

If a customer is receiving a benefit as of July 31, 2014, the benefit will continue until September 30, 2014, Hartwick explains. Then a check will be mailed for the final benefit payment in September 2014.