Ellen and Gabriel Fineman held MasterCard credit cards issued by Citibank. Holders of these cards paid an annual $15 fee. The issuance and use of the cards were governed by a retail installment credit agreement, which contained the following statement: “We can change this Agreement including the finance charge and the annual percentage rate at any time.” The agreement did provide for thirty days’ notice of any such changes, and the cardholder had aright to reject the changes in writing and return the credit card. Two months before the expiration of the Finemans’ cards, Citibank notified them that it was increasing its annual fee to $20; however, Citibank was also providing its cardholders with extra services and benefits, such as “$100,000 common carrier travel insurance.” The Finemans did not object in writing, nor did they return the cards. In fact the Finemans did not remember ever receiving the notice, but admitted: “it may have been thrown out as junk mail.” Citibank added 83 cents to the Finemans’ next bill, the prorated portion of the increase for the two months remaining on their cards. The next month, Citibank charged the increased $20 annual fee. The Finemans filed suit (a class-action lawsuit on behalf of all cardholders) to recover the increased charges. Among other claims, the Finemans argued that the modification failed because the travel insurance was not adequate consideration for the modification, because they never received any benefits from the insurance, and because its cost to Citibank was negligible.
1. Was there adequate and legally sufficient consideration for Citibank’s modification of the annual credit card fee?
2. Would your answer change if the Finemans had read the notice?
3. Would your answer be different if Citibank had increased the interest rate from 9.9%to 24.9% using the same method and costing the Finemans $2,490 in interest over the next year?
