Cases that apply or interpret 15 USC 1666i of the Fair Credit Billing Act (FCBA).
1. Hasan v. CHASE BANK USA, NA, 880 F. 3d 1217 (10th Circuit 2018)
https://scholar.google.com/scholar_case?case=17423965640426567968
Hasan is a significant case that directly addresses 15 USC 1666i of the Fair Credit Billing Act (FCBA). The Tenth Circuit interpreted the key provision regarding "credit outstanding" in section 1666i.
In this case, Dr. Hasan ordered wine from Premier Cru Fine Wines and paid using his Chase and American Express credit cards. When Premier Cru declared bankruptcy without delivering wine worth nearly $1 million, Hasan sought refunds from both credit card companies under 15 USC 1666i.
The court's key holdings regarding 15 USC 1666i were:
Section 1666i has two parts: 1666i(a) makes credit card issuers "subject to all claims (other than tort claims) and defenses arising out of any transaction in which the credit card is used as a method of payment," but this is explicitly limited by 1666i(b).
Section 1666i(b) limits a cardholder's claims to "the amount of credit outstanding with respect to [the disputed] transaction at the time the cardholder first notifies the card issuer."
The court interpreted "credit outstanding" to mean the amount of credit extended by the card issuer that the cardholder hasn't yet paid back - essentially, whatever balance remains unpaid on the credit card for the disputed transaction.
Since Hasan had paid his credit card bills in full, there was no "credit outstanding" related to the wine purchases, and thus he could recover nothing under 1666i regardless of whether it creates an affirmative right of action.
The court rejected Hasan's argument that "credit outstanding" should be interpreted differently for future delivery transactions, noting that the statute doesn't create different rights for different types of transactions.
- The most significant recent case on 15 USC 1666i
- Held that "credit outstanding" in 1666i(b) means "the amount of credit extended by the card issuer that the cardholder hasn't yet paid back"
- Ruled that when a consumer has fully paid their credit card balance, there is no "credit outstanding" and thus no claim under 1666i
- Rejected the consumer's argument that "credit outstanding" should be interpreted differently for future delivery transactions
Case citations used by the court relating to 15 USC 1666i issues:
Beaumont v. Citibank, No. 01 Civ. 3393(DLC), 2002 WL 483431 (S.D.N.Y. Mar. 28, 2002) - cited regarding whether 1666i creates an affirmative right of action
The court also cited several general statutory interpretation cases, but Beaumont was the only case directly dealing with section 1666i interpretation.
See: 10th Cir. Affirms Dismissal of Fair Credit Billing Act Claims Due to Paid Off Balance - Maurice Wutscher
Tenth Circuit Affirms Dismissal of Fair Credit Billing Act Complaint - Shook, Hardy & Bacon
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Other cases that apply or interpret 15 USC 1666i of the Fair Credit Billing Act.
2. Singer v. Chase Manhattan Bank, 890 P.2d 1305 (Nev. 1995)
- Addressed the geographic limitation in 15 USC 1666i(a)(3)
- Enforced the statute's 100-mile limit for transactions that occur outside the cardholder's state
- Declined to create exceptions to this geographic limitation
3. Moynihan v. Providian Financial Corp., No. JFM-02-2795 (2003 USDC D. Md.)
https://www.casemine.com/judgement/us/59147913add7b049343f1354
The court in Moynihan explicitly states that "§ 1666i provides cardholders who meet the criteria of 1666i(a) and who possess a valid non-tort claim or defense against a merchant the right to chargeback certain outstanding amounts by withholding payment."
- Interpreted 1666i as not creating an independent cause of action
- Held that 1666i only allows cardholders to assert claims in three instances: as justification for withholding payment, in lawsuits filed by card issuers to collect, or in connection with TILA violation lawsuits
- Concluded that 1666i provides a chargeback right, not an affirmative cause of action
The court explicitly states that "§ 1666i does not create an independent cause of action for a cardholder" but instead only allows cardholders to assert claims against card issuers in three specific instances.
The opinion confirms that § 1666i only permits cardholders to assert claims: "(1) as a justification for withholding payment; (2) in any lawsuit filed by the card issuer to collect on the account; or (3), if appropriate, in connection with a lawsuit brought by the cardholder for a violation of TILA."
The court cites 12 C.F.R. § 226.12(c)(1) to support its interpretation that the FCBA provides cardholders "the right to chargeback certain outstanding amounts by withholding payment."
The opinion specifically notes that "Moynihan did not withhold payment. Rather, he filed this suit seeking affirmative relief against Providian," which is precisely why his claim failed.
The court cites Beaumont v. Citibank as being "directly on point" with regard to this interpretation of § 1666i.
4. Beaumont v. Citibank, No. 01 Civ. 3393(DLC), 2002 WL 483431 (S.D.N.Y. Mar. 28, 2002)
Cause: 28:1331
- Referenced by the Tenth Circuit in Hasan
- Found that the FCBA is structured to facilitate withholding of payment by cardholder
- Determined that if a card issuer sues for payment, a cardholder can use 1666i defensively
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Baker v. Capital One Bank, Cause: 1:12-cv-00971-SEB-DKL (S.D. IN. Nov. 26, 2012)
§ 226.12(c) of Regulation Z. Section 226.12(c) is the implementing regulation for 15 U.S.C. § 1666i, which “allows a cardholder to assert any non-tort claims or defenses arising out of the underlying credit card transaction against a credit card issuer.” Beaumont v. Citibank (S.D.) N.A., No 01. Civ. 3393(DLC), 2002 WL 483431, at *5 (S.D.N.Y. Mar. 28, 2002). However, § 1666i does not create an independent cause of action. Id. at *6-7. Thus, because Baker has not alleged that Capital One committed any independent violation of the TILA under § 1640(e), her claim fails as a matter of law.
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These cases collectively establish that 15 USC 1666i:
1. Has a strict limit on claims based on "credit outstanding" at the time of notification
2. Contains geographical limitations (same state or within 100 miles)
3. Is primarily defensive rather than creating an affirmative cause of action
4. Provides no remedy for consumers who have already paid their credit card bills in full
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McGarvey v. Citibank (South Dakota) N.A., 95 Civ. 123, 1995 WL 404866, at *5 (N.D.Ill. 1995).
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FCBA - Fair Credit Billing Act (An amendment to the Truth In Lending Act)
15 U.S. Code § 1666i - Assertion by cardholder against card issuer of claims and defenses arising out of credit card transaction; prerequisites; limitation on amount of claims or defenses
(a)Claims and defenses assertible
Subject to the limitation contained in subsection (b), a card issuer who has issued a credit card to a cardholder pursuant to an open end consumer credit plan shall be subject to all claims (other than tort claims) and defenses arising out of any transaction in which the credit card is used as a method of payment or extension of credit if (1) the obligor has made a good faith attempt to obtain satisfactory resolution of a disagreement or problem relative to the transaction from the person honoring the credit card; (2) the amount of the initial transaction exceeds $50; and (3) the place where the initial transaction occurred was in the same State as the mailing address previously provided by the cardholder or was within 100 miles from such address, except that the limitations set forth in clauses (2) and (3) with respect to an obligor’s right to assert claims and defenses against a card issuer shall not be applicable to any transaction in which the person honoring the credit card (A) is the same person as the card issuer, (B) is controlled by the card issuer, (C) is under direct or indirect common control with the card issuer, (D) is a franchised dealer in the card issuer’s products or services, or (E) has obtained the order for such transaction through a mail solicitation made by or participated in by the card issuer in which the cardholder is solicited to enter into such transaction by using the credit card issued by the card issuer.
(b)Amount of claims and defenses assertible
The amount of claims or defenses asserted by the cardholder may not exceed the amount of credit outstanding with respect to such transaction at the time the cardholder first notifies the card issuer or the person honoring the credit card of such claim or defense. For the purpose of determining the amount of credit outstanding in the preceding sentence, payments and credits to the cardholder’s account are deemed to have been applied, in the order indicated, to the payment of: (1) late charges in the order of their entry to the account; (2) finance charges in order of their entry to the account; and (3) debits to the account other than those set forth above, in the order in which each debit entry to the account was made.
(Pub. L. 90–321, title I, § 170, as added Pub. L. 93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.)
https://www.law.cornell.edu/uscode/text/15/1666i
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