A penny here, a penny there, and it all adds up.
That is the crux of a lawsuit a Florida cardholder has filed against JPMorgan Chase & Co. Ann Marie Caban alleges that the issuer has been overcharging her this year, because when it calculates her daily interest charges, it divides the annual percentage rate by 365, without adding an extra day for the leap year.
Ms. Caban says she has been overbilled 4 cents a month — on a balance of roughly $600. But the suit seeks class-action status and $100 million of damages, claiming that JPMorgan Chase inflated charges for "tens of millions" of cardholders who carried balances this year and in 2004 (the previous leap year).
Several legal experts called the suit's arguments dubious. But some observers said it would be reasonable to require card issuers to factor leap years into their calculations, rather than letting them pocket a few cents from each cardholder.
"As a policy matter, they should have to give consumers those pennies," said Adam Levitin, an associate professor at Georgetown University Law Center, who nevertheless found the suit shaky.
Tanya Madison, a spokeswoman for JPMorgan Chase's card unit in Wilmington, Del., said it does not discuss pending litigation.
"With regard to calculating charges for leap year, we comply with Federal Reserve guidelines and all applicable law," she said.
The Fed's Regulation Z, which implements the Truth-in-Lending Act, says that when a finance charge is determined using a daily periodic rate, the APR may be determined "by dividing the total finance charge by the sum of the daily balances and multiplying the quotient by 365."
Prof. Levitin said the regulation is clear that "the APR can be based on a 365-day formula," leap year or not.
Ms. Caban's attorney, Roman Groysman of Ginnis & Groysman PA in Fort Lauderdale, Fla., would not discuss the case, saying he did not have his client's permission to do so.
The complaint, filed June 13 in the U.S. District Court for the Southern District of Florida, says JPMorgan Chase's calculation method resulted in APRs that were "in reality always higher than what Chase represented in the monthly billing statements that it generated and transmitted to its cardholders."
The suit does not say what the APR was for Ms. Caban's account. (Both the daily rate she was charged using a 365-day formula and the "true" rate the complaint says she should have been charged produce an APR of 29.24%.)
Nessa Feddis, a senior federal counsel at the American Bankers Association in Washington, said federal regulations give issuers some leeway in APR calculations, primarily because banks were hit with many lawsuits in the 1970s claiming violations for minor errors.
"If you're within a certain percentage, or it's a very small amount, it's not considered a violation," she said.
Prof. Levitin said he was surprised the suit alleged violations of Florida law — including breach of contract, unjust enrichment, breach of fiduciary duty, and unfair and deceptive trade practices — rather than Truth-in-Lending violations.
If JPMorgan Chase complied with Reg Z, it should have a "reasonably strong preemption defense," in addition to safe-harbor defenses "for reasonable accuracy and good-faith errors," he said.
Leonard A. Bernstein, a partner at Reed Smith LLP in Philadelphia, said the suit's "breach of contract claim is weak," because "the plaintiff does not tell you which provision" of the cardholder's agreement with JPMorgan Chase was breached.
(A reporter's cardholder agreement with JPMorgan Chase says: "To get the daily periodic rate, we divide the APR by 365.")
Marc Sacher, a managing director at Auriemma Consulting Group Inc. of Westbury, N.Y., which advises credit card issuers, questioned the motivation for filing the suit.
"When you think about the consumer being harmed of 50 cents a year, this is not an irate consumer," Mr. Sacher said. "This is a law firm looking to make money from a class-action status."
In a posting this week on the blog CreditSlips.org, Prof. Levitin wrote: "Regardless of the merits of this suit, it serves as a good reminder of why class actions are such an important mechanism. The harm of getting charged an extra day of interest on a credit card is too small for any individual to bother seeking redress. …
"But like the scheme in [the movie] 'Office Space,' swiping a few cents (or fractions of a cent) from lots of folks can amount to millions of dollars," Prof. Levitin wrote. "And if we don't care about a few cents here or there, where do we draw the line? A few dollars? A few hundred dollars?"