The Monogram Case

In the May 2000 issue of Spotlight we reported the Monogram case regarding the export of interest and fees from one state to another. You may recall that Patricia Heaton, a resident of Louisiana, bought video records and other items from Campo Appliances, using her Campo credit card, which had been issued by GE's Monogram Credit Card Bank in Georgia. Ms. Heaton built up a balance of over $1,040 on her account: unpaid balances, interest charges and late-payment fees. Monogram sued her in the small claims court in New Orleans. Eventually, the case became a class action suit, with the core issue being whether Monogram was really a bank, a status necessary for Monogram to export an interest rate of 21.84 percent from Georgia to New Orleans. Since Monogram could export its interest rate to citizens of other states if it were a bank, the basic issue was whether Monogram was a bank.

CardTrak reports that the U.S. Supreme Court has voted not to hear an appeal by GE from a federal judge's ruling that Monogram was not a state bank because it was not a bank. It was not a bank because it did not take deposits, except from its parent, GE. Since it was not a bank, it could not export its credit card rates to citizens of other states. Presumably, the decision will affect other credit card banks. In the earlier article, we quoted a Monogram attorney, who observed that, if the case went against Monogram, "It would be a major explosion of litigation that would have liabilities in the billions of dollars."