There have not been many cases that have used 15 U.S.C. § 1666i as an affirmative defense, but the cases that have examined the issue uniformly agree that an affirmative defense to a debt collection lawsuit is the proper method for a consumer to assert the right, limited only to the extent that the contested debt remains unpaid. The consumer must make a good-faith attempt to resolve the issue with the merchant, according to the statute. Notice to the credit card issuer is not required.
This is not a billing error issue. The defendant was entitled to withhold payment.
Statement of the Law – 15 U.S.C. § 1666i (Fair Credit Billing Act Defense)
Introduction
Section 1666i of the Fair Credit Billing Act (FCBA), codified at 15 U.S.C. § 1666i, offers a powerful—though narrowly limited—defense to consumers facing debt collection lawsuits involving disputed credit card transactions. While the statute does not create an affirmative cause of action, it enables consumers to assert valid claims and defenses against credit card issuers—and their assignees—when specific statutory requirements are met. Despite the limited number of published opinions addressing § 1666i, courts have uniformly construed it as a shield, not a sword, preserving the consumer’s right to withhold payment in response to merchant misconduct.
Statutory Framework and Interpretation
Under § 1666i(a), a consumer may assert “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,” provided:
The consumer made a good-faith attempt to resolve the dispute with the merchant;
The amount in controversy exceeds $50; and
The transaction took place either in the same state as the consumer’s billing address or within 100 miles of that address.
These conditions are conjunctive; failure to satisfy any of them will bar the defense.
Section 1666i(b) further limits the defense to the amount of “credit outstanding” on the disputed transaction at the time the consumer notifies the card issuer. Once the balance has been paid in full, the defense is extinguished.
Defensive Use Only: No Private Right of Action
Every court to address the issue has emphasized that § 1666i is not an affirmative source of relief. Instead, the provision is strictly defensive in nature. Consumers may raise it:
In response to a debt collection lawsuit;
In litigation initiated by the card issuer to collect payment;
In conjunction with a claim under the broader Truth in Lending Act (TILA).
Importantly, courts have rejected attempts to use § 1666i offensively to recover damages or refunds.
In Moynihan v. Providian Financial Corp., the court made this distinction explicit, holding that § 1666i “does not create an independent cause of action” but instead permits a consumer to “withhold payment” in qualified circumstances. Because Moynihan sought affirmative relief, rather than using the statute defensively, his claim failed.
Similarly, in Beaumont v. Citibank, the court confirmed that the FCBA’s structure “facilitates withholding of payment by cardholders” and allows § 1666i to be raised as a defense when the issuer sues.
Elements of the Defense: What a Consumer Must Prove
To successfully invoke § 1666i in litigation, a consumer must establish:
Credit Card Transaction: The disputed transaction must have been made using a credit card—not a debit card or other method.
Valid Non-Tort Claim Against Merchant: The underlying dispute must involve a breach of contract, failure to perform, or other non-tort claim (e.g., defective goods, services not rendered).
Amount in Controversy Over $50: The contested portion of the transaction must exceed $50.
Geographic Limitation Met: The transaction must have occurred either in the same state as the consumer’s billing address or within 100 miles of that address. Courts, including the Nevada Supreme Court in Singer v. Chase Manhattan Bank, have strictly enforced this requirement, declining to create any exceptions.
Good-Faith Attempt to Resolve: The consumer must have made a good-faith effort to resolve the dispute directly with the merchant. Evidence might include written correspondence, documented phone calls, or complaints filed with licensing or regulatory bodies.
Credit Outstanding at Time of Notice: As held in Hasan v. Chase Bank USA, the consumer must have notified the card issuer of the dispute while there was still an unpaid balance related to the transaction. If the cardholder has already paid the full amount, the defense is forfeited.
Successor-in-Interest Status of Plaintiff: In cases involving third-party debt buyers, the consumer must establish that the plaintiff stands in the shoes of the original creditor and is therefore subject to the same defenses, including those under § 1666i. Courts have applied traditional assignment principles to reach this conclusion.
Defensive Assertion Only: The consumer must be asserting § 1666i as a shield against liability, not as the basis for an affirmative lawsuit.
Judicial Treatment and Case Law
Several key cases have interpreted § 1666i’s scope and limitations:
Hasan v. Chase Bank USA, N.A., 880 F.3d 1217 (10th Cir. 2018): Defined “credit outstanding” as the unpaid portion of the disputed charge at the time notice is given to the issuer. Once the debt is paid, the defense is no longer available.
Singer v. Chase Manhattan Bank, 890 P.2d 1305 (Nev. 1995): Enforced the statute’s 100-mile geographic limitation without exception.
Moynihan v. Providian Financial Corp., No. JFM-02-2795 (D. Md. 2003): Reiterated that § 1666i provides no affirmative cause of action and clarified the limited contexts in which it may be asserted.
Beaumont v. Citibank, No. 01 Civ. 3393(DLC), 2002 WL 483431 (S.D.N.Y.): Held that the statute’s purpose is to allow a defense to payment, not to support a damages claim.
Baker v. Capital One Bank, No. 1:12-cv-00971 (S.D. Ind. 2012): Cited Regulation Z (§ 226.12(c)) and reiterated that absent a separate TILA violation, § 1666i cannot serve as the basis for affirmative relief.
Conclusion
As courts continue to clarify the scope of this provision, § 1666i remains an underutilized yet important component of consumer protection in credit card litigation—particularly where the consumer acted promptly and in good faith to resolve the dispute
Thomas Fox, J. D.
Fox Paralegal Services
Lake Cumberland, Kentucky
thomas@foxparalegalservices.com
TEXT ONLY: 502-230-1613
Voice: 606-219-6982
Disclaimer:
This information is for general educational and information purposes only and should not be taken as legal advice. I am not a lawyer. I can provide legal information but not advice. The difference is that legal information is equally applicable to everyone. Legal advice is tailored to your specific situation, and it is based upon a personal relationship of trust between you, as a client, and a lawyer. Your communication with a lawyer may be privileged and protected by law. Your communications with me are not. It is advisable to consult with a qualified attorney in your specific jurisdiction for guidance on your legal rights and obligations. The laws of every state are different. Consulting with experienced local counsel is essential. If you are involved in litigation, I urge you to seek legal counsel.
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