A deal is a deal. Or it should be.
For years, Chase bank offered a Payment Protector plan. For an extra monthly fee — typically a bit less than 1% of the card balance — credit cardholders could insure themselves against job loss, illness or disability, with card payments deferred for up to two years.
They could also protect themselves from sticking their estate with the tab for any outstanding balances after their death. Payment Protector covered up to $25,000 in credit card debt per card left behind after customers went to that ATM in the sky.
Dorothy Cross, 95, has a combined balance of more than $38,000 on three Chase cards. For about a decade, she's paid Payment Protector fees so that, after she dies, this debt won't overwhelm what little savings she plans to leave family members.
But now, after more than $16,000 in fee payments on Cross' part, Chase says it will no longer honor its end of the bargain. Payment Protector will disappear in May 2014, the bank says, and no claims will be honored after that time.
Cross' situation, which is shared by potentially hundreds of thousands of Payment Protector customers, was brought to my attention by her son, Emory, who helps manage his mother's financial affairs.
"She's been paying these fees in good faith for many years," he said. "And now it's being jerked out from under her."
Unethical as the bank's move seems, Chase is acting within its rights. The contract for Payment Protector states that the company can change the terms of the deal at any time.
It also says that "if your account is closed by us for any reason, your enrollment in the plan will automatically be canceled without notice."
By Emory Cross' reckoning, those conditions not only were buried in the contract but also make the agreement essentially worthless.
Customers were required to make payments every month for coverage, he observed, but the bank has no responsibility to make good on its responsibilities.
In his mother's case, Emory Cross said, she could have paid off almost half her card balances with the fees she paid for Payment Protector. Instead, she chose the peace of mind of being insured against financial catastrophe.
Now she's losing that insurance and must grapple with the card balances that went unpaid all these years.
"She gets nothing for all those fees," he said.
It might seem as though his mother was trying to duck her obligations to the bank. She clearly intended to leave Chase holding the bag for thousands of dollars in credit card debt after her death.
But that's precisely what Payment Protector offered.
"You may be eligible for a balance cancellation because of an accidental death or death," the contract says. "'Balance cancellation' means that you will receive a cancellation of your account balance as of the date of your accidental death or death, up to $25,000."
Because Emory Cross' mother paid for Payment Protector for each of her Chase cards, she was covered for the full amount of her outstanding balance.
Now, he said, his mother will be covered only if she dies before June 1, 2014. If she survives past that date, all bets are off.
"She in pretty good shape," he said. "She plays bridge with friends who are 100. Who knows how long she'll last?"
It's morbid to think that a consumer will get her money's worth only if she dies by a certain date. If Cross' mother makes it another seven months, all she'll get for her years of loyalty to Chase will be the indignity of losing her life's savings.
Cap One paid $210 million in fines last year to the Consumer Financial Protection Bureau for deceptively marketing some credit-card services, including payment protection. Chase agreed in 2011 to pay $20 million to settle a class-action lawsuit over allegedly deceptive practices related to Payment Protector.
Consumer advocates encourage cardholders to pay down their balances rather than pony up fees for additional bells and whistles. Such services, they say, are seldom worth the money.
Paul Hartwick, a Chase spokesman, said the bank is doing away with Payment Protector "because we are aiming to simplify the set of products and services we offer customers."
He said customers were notified that they wouldn't have to pay any more fees from May of this year until May 31, 2014, but would still be covered during that time.
"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.
It doesn't, however, compensate for all the money customers had already invested in the program through their monthly fees. Chase is pocketing the $16,000 paid by Cross without having had to pay a single claim.
And while the bank can ease any shame it may feel by saying it gave customers a full year of free coverage while they made other arrangements, the reality is that many people can't turn anywhere else.
Emory Cross said he looked around for a new provider of credit insurance for his mother. But at 95, she was deemed too old for coverage.
"It's driving her crazy," Cross said. "She's worrying herself to death."
Thanks to Chase, timing is now a factor.
David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to firstname.lastname@example.org.