IN THE NATIONAL
ARBITRATION FORUM
MBNA BANK AMERICA, N.A.
Claimant,
v. No. FA0504000441551
XXXXXXX,
Respondent.
RESPONDENT’S
RESPONSE TO ADDITIONAL INFORMATION
REQUESTED
BY THE ARBITRATION FORUM
Respondent
alleges that MBNA has fraudulently disclosed a misleading amount of interest,
21.9%, that it claims is being charged on outstanding credit card balances,
when in fact the actual effective annual interest rate is four times that
amount. Exhibit 1 shows a credit card
statement issued by MBNA Bank to Respondent XXXXXXX, which states the periodic
rate for DAILY compounding of interest on outstanding balances is
0.060219%. MBNA claims this is a
“compounding annual interest rate” of 21.98%.
See Exhibit 1.
Exhibit 2
discloses a similar credit card statement issued by Chase Manhattan Bank. Chase Manhattan charges a DAILY periodic
interest rate of approximately one half the amount charged by MBNA bank. The Chase daily periodic rate is 0.03148%,
which yields an effective annual interest rate of 42.46%. See Exhibit 2.
MBNA has
fraudulently failed to disclose that its EFFECTIVE ANNUAL INTEREST rate is
approximately 84% rather than the 21.98% that appears on its statements. Politicians all across the nation, and
particularly in Tennessee, would consider a loan for 84% interest to be an
illegal and usurious amount of interest that is unenforceable as a matter of
public policy. In fact, some
politicians might even deem that interest rate to be “loan sharking” and
seeking criminal prosecution of the lender for racketeering and extortion.
The arbitrator
can examine all four corners of the MBNA contract and all statements sent to XXXXXXX,
and it will not find any interest rate even approximately close to 84%
appearing anywhere on MBNA’s statements or its credit card contract. It is not simply that Chase Manhattan has
chosen to honestly disclose its effective annual interest rate and MBNA made a
business decision not to disclose its rate.
Instead, we find one credit card company is complying with Tennessee
consumer law to disclose key interest rates to consumers, while MBNA
deceptively hides their interest rate in words telling the consumer how it can
be calculated, but not disclosing the outrageous amount in bold print as required
by Tennessee’s Consumer Protection Act.
Respondent is
concerned that the arbitrator for this case will have limited mathematical
ability that stops at 8th grade Algebra. The formulas used to calculate an effective annual interest rate
cannot be performed on a standard calculator.
It requires a special financial calculator that can compute formulas
where (1.00060219) is raised to the exponent 364 or 365. Any mediator who has NOT successfully
passed a university course in Managerial Finance or Financial Management is
automatically disqualified from rendering an opinion in this case involving
complicated quantitative finance formulas.
If the
mediator simply accepts that 21.98% is the effective annual interest rate on
the MBNA account in dispute, then Respondent will seek sanctions against the
National Arbitration Forum for employing arbitrators who lack the intelligence
to compute daily compounded interest rates.
Respectfully
submitted this ____ day of May, 2005.
______________________________________
XXXXXXX, Respondent pro se
XXXXXXXX Road
Tellico Plains, TN
37385
I certify that a true and exact copy of this answer was mailed to Claimant’s Attorney of Record on May ____, 2005, at the following address:
Wolpoff & Abramson
Ronald S. Canter, Esq.
2 Irvington Centre
702 King Farm Blvd
Rockville MD 20850
______________________________
XXXXXXX, Respondent pro se
EXHIBIT 2: CHASE MANHATTAN CREDIT
CARD STATEMENT
SHOWS 0.03148% DAILY PERIODIC RATE EQUATES TO 42.46%
EFFECTIVE ANNUAL RATE OF INTEREST
Statement Date: 03/28/05 - 04/27/05
Payment Due Date: 05/17/05
Minimum Payment Due: $20.00
Total Credit Line $5,000
Available Credit $4,967
Cash Access Line $1,000
Available for Cash $1,000
Previous Balance $13.18
Purchases, Cash, Debits +$17.85
Finance Charges +$1.00
New Balance $32.03
This Statement is a Facsimile - Not an original
Your credit card account is past due!
Please send payment immediately.
Call 1-800-955-8030 (collect
1-302-594-8200) today.
REWARDS SUMMARY __________________________________________________________
Previous points balance 8,325
Points earned for finance charges 1
Points earned on purchases 3
Total points expired this period 129
New total points balance 8,200
120 points due to expire on 05/2005
To redeem your points, call the
number on the
back of your card or log on to
www.ChooseMyRewards.com
TRANSACTIONS
Trans Amount
Date Reference Number Merchant Name
or Transaction Description Credit Debit
03/28 24226385087360484318701 WM
SUPERCENTER OAK RIDGE TN $2.85
04/17 LATE FEE 15.00
FINANCE CHARGES PERIODIC RATE(S) AND APR(S) MAY VARY
Daily Periodic Rate Corresponding
Average Daily Balance Finance Charge Due Transaction FINANCE
Category 31 days in cycle APR Previous
Cycle Current Cycle To Periodic Rate Fee CHARGES
Purchases
.03148% 11.49% $6.83 $21.43 $1.00 $0.00 $1.00
Cash advances .05888% 21.49% $0.00
$0.00 $0.00 $0.00 $0.00
Total finance charges $1.00
Effective
Annual Percentage Rate (APR): 42.46%
The Corresponding APR is the rate of
interest you pay when you carry a balance on purchases or cash advances.
The Effective APR represents your
total finance charges - including transaction fees
such as cash advance and balance
transfer fees - expressed as a percentage.
CARDMEMBER SERVICE
PO BOX 94014
PALATINE IL 60094-4014
New Balance Payment Due Date Past Due
Amount Minimum Payment
$32.03 05/17/05 $10.00 $20.00
Make your check payable to Chase Card
Services.
New address or e-mail? Print on back.
IMPORTANT NEWS
Did you know you could transfer
balances online?
Check out if you qualify by going to
www.chase.com/balancetransfer.
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Dr. MICHAEL A. S. GUTH |
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