TILA Does Not Apply if User Had Authority

Identity Theft, Account Takeover, Unauthorized Use, Misuse, Apparent Authority, Authorized Use.
David A. Szwak

TILA Does Not Apply if User Had Authority

Postby David A. Szwak » Mon Oct 17, 2005 7:42 pm


If the court finds that the card bearer has "actual, implied or apparent authority" then the Truth-In-Lending Act has no application, per 15 U.S.C. 1602(o), 1643, and the cardholder's contract with the credit issuer and state law applies. Walker Bank & Trust Co. v. Jones, 672 P.2d 73, 76 (Utah 1983); American Express TRS Co., Inc. v. Web, Inc., 405 S.E.2d 652 (Ga. 1991).

The Truth-In-Lending Act protects a cardholder from liability only for "unauthorized use," not from misuse by an authorized user. A user (card bearer) does not become "unauthorized" simply because the cardholder gives notice of the misuse to the issuer (creditor). The issue is whether any authority was ever granted. American Express v. WEB, Inc., 405 S.E.2d 652 (Ga. 1991); 15 U.S.C. 1643.

If complained of use of credit card resulted from authorized use, then reference must be made to cardholder's contract with credit issuer as to how to terminate cardholder's liability for any or all use of credit cards or charges. Harlan v. First Interstate Bank of Utah, 672 P.2d 73 (Utah 1983), cert. den., 104 S.Ct. 1911, 466 U.S. 937, 80 L.Ed.2d 460 (1983).

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