Bank Error in Your Favour
August 8, 2019 9:21 AM Subscribe
Chase cancels all outstanding debt for Canadian credit cardholders. The error was apparently entering the Canadian market in the first place. Now, to get out of the market, Chase is simply cancelling all the debts owed by their Canadian cardholders.
^ same.
posted by Young Kullervo at 9:51 AM on August 8, 2019
posted by Young Kullervo at 9:51 AM on August 8, 2019
I am the friend.
posted by vibrotronica at 9:52 AM on August 8, 2019 [8 favorites]
posted by vibrotronica at 9:52 AM on August 8, 2019 [8 favorites]
Dang, now I'm sad I didn't sign up for the amazon card they were constantly flogging me.
posted by Mitheral at 9:53 AM on August 8, 2019 [3 favorites]
posted by Mitheral at 9:53 AM on August 8, 2019 [3 favorites]
Solid post title.
posted by Chrysostom at 10:15 AM on August 8, 2019 [23 favorites]
posted by Chrysostom at 10:15 AM on August 8, 2019 [23 favorites]
Whoa, has that ever happened on this large a scale before?
posted by BeeDo at 10:16 AM on August 8, 2019
posted by BeeDo at 10:16 AM on August 8, 2019
So don't we keep hearing how debt jubilees can't be considered because they will blight crops or crash all the planes or something? What's so different this time?
posted by wenestvedt at 10:32 AM on August 8, 2019 [20 favorites]
posted by wenestvedt at 10:32 AM on August 8, 2019 [20 favorites]
Actually, what makes no sense to me is why Chase did not just sell the debt for say $0.10, or even $0.20 on the (Canadian) dollar. I am sure a debt collector would then be able to collect around $0.50 on the dollar. Bless Jamie Dimon.
posted by AugustWest at 10:35 AM on August 8, 2019 [1 favorite]
posted by AugustWest at 10:35 AM on August 8, 2019 [1 favorite]
I had one of those Amazon cards (no fee/commission currency conversion made it a very useful travel card) but never kept a balance on it. I think they ended the card more than a year ago so these people have been making payments on a closed account for a while. Good for them and good for Chase for doing this when it didn't have to.
posted by any portmanteau in a storm at 11:14 AM on August 8, 2019
posted by any portmanteau in a storm at 11:14 AM on August 8, 2019
I've been pondering that a lot and I have two thoughts:
Maybe the amount they were bringing in in interest on those debts wasn't enough to make it worth keeping the payment processing and customer service staff in place for another couple of months while they engaged in the wind-down of selling off the debt, sending the notices, etc.
Those cards were co-branded with Amazon and Marriott, who might have seen some backlash if suddenly a bunch of cards that were not really in collections territory -- people were making the minimum payments on most of them -- ended up in collections. Chase may have preferred remaining on friendly terms with Amazon and Marriott over recovering some fiddling small change on the outstanding cards.
posted by jacquilynne at 11:16 AM on August 8, 2019 [4 favorites]
Maybe the amount they were bringing in in interest on those debts wasn't enough to make it worth keeping the payment processing and customer service staff in place for another couple of months while they engaged in the wind-down of selling off the debt, sending the notices, etc.
Those cards were co-branded with Amazon and Marriott, who might have seen some backlash if suddenly a bunch of cards that were not really in collections territory -- people were making the minimum payments on most of them -- ended up in collections. Chase may have preferred remaining on friendly terms with Amazon and Marriott over recovering some fiddling small change on the outstanding cards.
posted by jacquilynne at 11:16 AM on August 8, 2019 [4 favorites]
They probably realized they were being paid in Canadian dollars and realized it wasn't worth it.
posted by clawsoon at 11:16 AM on August 8, 2019 [10 favorites]
posted by clawsoon at 11:16 AM on August 8, 2019 [10 favorites]
BRB, going to the storage shed that has my time machine.
posted by Bee'sWing at 11:39 AM on August 8, 2019 [3 favorites]
posted by Bee'sWing at 11:39 AM on August 8, 2019 [3 favorites]
I suspect a cat was involved.
posted by clavdivs at 11:44 AM on August 8, 2019 [4 favorites]
posted by clavdivs at 11:44 AM on August 8, 2019 [4 favorites]
Very important to note that the cards were discontinued March, 2018, and since then no new transactions could be added.
In other words, those who still have debt have likely paid significant interest between then and now (APR is 19.9% on the card).
posted by Ahmad Khani at 11:59 AM on August 8, 2019 [6 favorites]
In other words, those who still have debt have likely paid significant interest between then and now (APR is 19.9% on the card).
posted by Ahmad Khani at 11:59 AM on August 8, 2019 [6 favorites]
as to why they didnt sell the debt to collectors.. my guess is social media. the amount that could be recouped was likely less than the goodwill and PR that their marketing people told them they could expect from outright forgiveness.
so that's arguably 1 point for social media recently. 23,946 against, but still!
posted by wibari at 12:00 PM on August 8, 2019 [2 favorites]
so that's arguably 1 point for social media recently. 23,946 against, but still!
posted by wibari at 12:00 PM on August 8, 2019 [2 favorites]
If you were still making minimum payments , Chase can't send the debt to collections.
So Chase's option with those customers is to sell the debt to another bank which administers credit card accounts, of which there are only a handful. (Like, your local credit union might issue you a credit card, but the call centre where accounts are administered is likely one of the big banks.) I imagine it's a significant IT project to move all those accounts over. The banks who could take these accounts on are probably not interested in deals that are in the tens of millions. (Likely what Chase had on its books nearly 18 months after the cards were cancelled.) It's only worth the effort to transition those paying clients over for a billion+.
There would have been other customers who had ceased making payments or were otherwise delinquent. Those could have been sent to collections, but if it's been a year plus, and it might not be easy to filter those ones from the main pool of folks still making payments. Selling the debt to collections leaves you with some legal liability, but forgiving all the debt lessens that a lot!
Some sharp eyed person may be able to find the forgiven amount in Chase's next earnings release.
posted by thenormshow at 12:14 PM on August 8, 2019 [8 favorites]
So Chase's option with those customers is to sell the debt to another bank which administers credit card accounts, of which there are only a handful. (Like, your local credit union might issue you a credit card, but the call centre where accounts are administered is likely one of the big banks.) I imagine it's a significant IT project to move all those accounts over. The banks who could take these accounts on are probably not interested in deals that are in the tens of millions. (Likely what Chase had on its books nearly 18 months after the cards were cancelled.) It's only worth the effort to transition those paying clients over for a billion+.
There would have been other customers who had ceased making payments or were otherwise delinquent. Those could have been sent to collections, but if it's been a year plus, and it might not be easy to filter those ones from the main pool of folks still making payments. Selling the debt to collections leaves you with some legal liability, but forgiving all the debt lessens that a lot!
Some sharp eyed person may be able to find the forgiven amount in Chase's next earnings release.
posted by thenormshow at 12:14 PM on August 8, 2019 [8 favorites]
Boring guy question, but is forgiven debt taxable as income in Canada? Or is it considered a gift or something?
posted by Think_Long at 12:54 PM on August 8, 2019 [1 favorite]
posted by Think_Long at 12:54 PM on August 8, 2019 [1 favorite]
For personal debts, I believe it's classed as a windfall, like lottery winnings. Business debts have a whole complicated set of rules in this scenario.
posted by jacquilynne at 1:02 PM on August 8, 2019
posted by jacquilynne at 1:02 PM on August 8, 2019
Gifts, lottery winnings are not taxable. neither is anything considered to be a windfall.
Gifts and other voluntary payments
1.3 The term gift is not defined in the Act. In common law jurisdictions, the courts have said that a bona fide gift exists when:
There is a voluntary transfer of property,
A donor freely disposes of his or her property to a donee, and
The donee confers no right, privilege, material benefit, or advantage on the donor or on a person designated by the donor.
posted by yyz at 1:15 PM on August 8, 2019
Gifts and other voluntary payments
1.3 The term gift is not defined in the Act. In common law jurisdictions, the courts have said that a bona fide gift exists when:
There is a voluntary transfer of property,
A donor freely disposes of his or her property to a donee, and
The donee confers no right, privilege, material benefit, or advantage on the donor or on a person designated by the donor.
posted by yyz at 1:15 PM on August 8, 2019
Christine Langlois, of Montreal, was also surprised by the news, especially considering she stopped making regular payments on her Amazon Visa five years ago.ಠ_ಠ
"It's kind of like I'm being rewarded for my irresponsibility," said the 24-year-old university student who's being forgiven a $1,300 debt.
posted by numaner at 1:19 PM on August 8, 2019 [4 favorites]
it might not be easy to filter those ones from the main pool of folks still making payments
Oh, they know who's delinquent. But selling even performing accounts has to be done at a discount because of various forms of breakage, so I reckon they added up the likely profit of assignment as against the value of vague public goodwill and found the latter to be greater. With the cards in runoff anyway, it doesn't seem wildly implausible.
posted by praemunire at 1:23 PM on August 8, 2019
Oh, they know who's delinquent. But selling even performing accounts has to be done at a discount because of various forms of breakage, so I reckon they added up the likely profit of assignment as against the value of vague public goodwill and found the latter to be greater. With the cards in runoff anyway, it doesn't seem wildly implausible.
posted by praemunire at 1:23 PM on August 8, 2019
"It's kind of like I'm being rewarded for my irresponsibility," said the 24-year-old university student who's being forgiven a $1,300 debt.
Speaking of irresponsibility, Chase chose to lend an 18 year old more than a thousand dollars.
posted by atrazine at 2:24 PM on August 8, 2019 [11 favorites]
Speaking of irresponsibility, Chase chose to lend an 18 year old more than a thousand dollars.
posted by atrazine at 2:24 PM on August 8, 2019 [11 favorites]
> Speaking of irresponsibility, Chase chose to lend an 18 year old more than a thousand dollars.
The first credit card I got was on-campus, when I was very desparate for money, and the temptation of a credit card was something I was very vulnerable to - especially since i had no familial support or scholarships. I was 18. It was a Chase card. The limit STARTED at $2000. It simply climbed up from there the more I spent.
In fairness, they had the least extortion-like rate (to the point where I still have the same damned account, but no longer carry a balance and kept negotiating APR down over time), and they were a bit more low key than the "FREE SHIRT IF YOU APPLY FOR THIS CARD" super-high interest credit cards, but they were doing this shit on campus, and the university was officially OK with this. Incredibly predatory.
posted by MysticMCJ at 3:07 PM on August 8, 2019 [1 favorite]
The first credit card I got was on-campus, when I was very desparate for money, and the temptation of a credit card was something I was very vulnerable to - especially since i had no familial support or scholarships. I was 18. It was a Chase card. The limit STARTED at $2000. It simply climbed up from there the more I spent.
In fairness, they had the least extortion-like rate (to the point where I still have the same damned account, but no longer carry a balance and kept negotiating APR down over time), and they were a bit more low key than the "FREE SHIRT IF YOU APPLY FOR THIS CARD" super-high interest credit cards, but they were doing this shit on campus, and the university was officially OK with this. Incredibly predatory.
posted by MysticMCJ at 3:07 PM on August 8, 2019 [1 favorite]
haha i remember that too. My mom warned me about taking those cards, and got me one on her account which had low interest rates due to her good credit score. But i knew plenty of people that signed up for those cards, and their stand was right outside the student union.
posted by numaner at 4:12 PM on August 8, 2019
posted by numaner at 4:12 PM on August 8, 2019
Speaking of irresponsibility, Chase chose to lend an 18 year old more than a thousand dollars.If it's been accumulating interest for five years at 19.5% APR and it's $1600 now, it started at under $700. Not that it was still a real smart loan, apparently.
posted by Gilgamesh's Chauffeur at 5:48 PM on August 8, 2019
I had one of these cards. In May, Chase sent me a cheque for CAD 0.70. Not really sure why.
posted by grouse at 6:38 PM on August 8, 2019
posted by grouse at 6:38 PM on August 8, 2019
I am so happy for every one of these people who just got a break.
posted by theora55 at 7:45 PM on August 8, 2019 [1 favorite]
posted by theora55 at 7:45 PM on August 8, 2019 [1 favorite]
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posted by AugustWest at 9:49 AM on August 8, 2019 [55 favorites]