Purposes Behind the FCBA, 15 USC 1666, et. seq.

David A. Szwak

Purposes Behind the FCBA, 15 USC 1666, et. seq.

Postby David A. Szwak » Sun Jan 15, 2006 7:18 pm

An examination of similar consumer protection legislation provides an insight into Congress's motive. In Lachman v. Bank of Louisiana, the court found that the purpose of the Fair Credit Billing Act (15 U.S.C. § 1666) and the Fair Debt Collection Practices Act (15 U.S.C. § 1692) "would be frustrated if consumers had to travel long distances to file and prosecute lawsuits against banks and credit card issuers, particularly in light of the limited liability established by the acts." 510 F.Supp. 753, 758 (N.D.Ohio 1981). Finally, the convenience of the parties will not be significantly hampered by allowing Collins to bring suit in the Eastern District. Venue is proper in the Eastern District because MECECU has sufficient contacts to make venue proper under 28 U.S.C. § 1391.

Collins v. Missouri Elec. Co-op. Employee Credit Union
Slip Copy, 2005 WL 1702687
E.D.Mo.,2005.
Jul 20, 2005

David A. Szwak

Postby David A. Szwak » Sun Jan 15, 2006 7:23 pm

744 A.2d 1043


District of Columbia Court of Appeals.
CRESTAR BANK, N.A., Appellant,
v.
Eric L. CHEEVERS, Appellee.
No. 97-CV-1584.
Argued March 9, 1999.
Decided Feb. 3, 2000.

Credit card issuer brought action against card holder, seeking to recover an outstanding balance. After bench trial, the Superior Court, Stephen F. Eilperin, J., ruled in favor of card holder, and card issuer appealed. The Court of Appeals, Reid, J., held that: (1) card holder was not required to inform card issuer of a billing dispute in order to trigger the protections against unauthorized use under the Truth in Lending Act (TILA), and (2) card issuer did not meet its burden of showing that card holder was liable for unauthorized use of the card to purchase train tickets.
Affirmed.

Before WAGNER, Chief Judge, and SCHWELB and REID, Associate Judges.



[6] This reading of the statute is consistent with the legislative history of § 1666 which reveals Congress' intent to protect the consumer against the creditor's unfair and inaccurate billing practices. Moreover, it is consistent with Federal Reserve Board staff interpretation of the unauthorized use provision of § 1643 and the billing error provision of § 1666 of *1048 Regulation Z, 12 C.F.R. pts. 226.12 and 226.13, regulations promulgated by the Board of Governors of the Federal Reserve System to implement TILA. In interpreting the notice to card issuer provision, the staff of the Board stated:
Notice of loss, theft, or possible unauthorized use need not be initiated by the cardholder....
The liability protections afforded to cardholders in § 226.12 do not depend upon the cardholder's following the error resolution procedures in § 226.13. For example, the written notification and time limit requirements of § 226.13 do not affect the § 226.12 protections.
12 C.F.R. pt. 226, Supp. I, at 354. Courts must give deference to agency interpretations of TILA and its implementing regulations. See Anderson Bros. Ford v. Valencia, 452 U.S. 205, 219, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981) ("[A]bsent some obvious repugnance to [TILA], the Board's regulation implementing this legislation should be accepted by the courts, as should the Board's interpretation of its own regulation."); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 565, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980) ("[D]eference is especially appropriate in the process of interpreting the Truth in Lending Act and Regulation Z."). Consequently, we conclude that § 1666 imposed no requirement on Mr. Cheevers to notify Crestar of a billing error before he could invoke the protections of § 1643. We turn now to § 1643.

David A. Szwak

Postby David A. Szwak » Sun Jan 15, 2006 7:26 pm

McCracken v. Hammon
Not Reported in N.E.2d, 1984 WL 3332
Ohio App., 1984.
May 31, 1984

The purpose of the Federal Truth in Lending and Fair Credit , Billing Acts, , 15 U.S.C. Section 1601 et seq, as expressed in Regulation Z, 12 C.F.R. Section 226 et seq, is to "promote the informed use of consumer credit by requiring disclosures about its terms and cost." 12 C.F.R. Section 226.1(b). The focus of these acts and their correspomding regulations is consumer credit. For the acts to be triggered, there must be an extension or arrangement of credit to a consumer by a provider of consumer goods or services. 15 U.S.C. Section 1602(e) and 15 U.S.C. Section 1602 (g). The case at bar is void of any indicia that appellee provided services to appellant on credit. When the agreed services had been performed, appellant promptly received an invoice which stated that the entire balance was due and payable. There was no mention of periodic payments or a finance charge.
When the outstanding balance was not paid within one month, appellee began to charge appellant two percent interest per month on the outstanding balance. Although we shall not comment on the propriety or legality of this action, as that issue is not now before us, we are convinced that appellee's action did not trisger Truth in Lending Act disclosure requirements. Appellee did not, by addition of the interest charges, "offer or extend credit"to appellant. See12 See 12 C.F.R. Section 226.1(c). Even if credit was offered or extended by such an action, therecord contains no proof that appellee regularly extended such credit to consumers (see 12 C.F.R. Section 226.2(17)(i)), another prerequisite to Truth in Lending Act application.
Therefore, the court below properly discounted appellant's assertion that he was entitled to rescind the transaction because appellee failed to make disclosures required by the Truth in Lending Act. Appellant's third assignment of error is, accordingly, overruled.
The assignments of error properly before this court having been ruled upon as heretofore set forth, it is the order of this court that the judgment or final order herein appealed from be, and the same hereby is, affirmed.
It is further ordered that a mandate be sent to the County Court of Clermont County, Ohio, for execution upon this judgment.
Costs to be taxed in compliance with App. R. 24.
And the court being of the opinion that there were reasonable grounds for this appeal, allows no penalty.
It is further ordered that a certified copy of this Memorandum Decision and Judgment Entry shall constitute the mandate pursuant to App. R. 27.
To all of which the appellant, by his counsel, excepts.

HENDRICKSON, P.J., KOEHLER and CASTLE, JJ., concur.
Judge Lyle W. Castle (Retired) sitting by assignment of the Supreme Court of Ohio.
Ohio App., 1984.
McCRACKEN v. HAMMON.
Not Reported in N.E.2d, 1984 WL 3332 (Ohio App. 12 Dist.)

David A. Szwak

Postby David A. Szwak » Sun Jan 15, 2006 7:28 pm

Jacobs v. Marine Midland Bank, N.A.
124 Misc.2d 162, 475 N.Y.S.2d 1003
N.Y.Sup.,1984.
May 07, 1984

Finally, the legislative history of 15 U.S.C. § 1666 et seq. (Fair Credit Billing Act, P.L. 93-495, tit. III, c. 4) shows that it amended *166 the Truth-in-Lending Act for the purpose of protecting the consumer against "unfair and inaccurate credit billing and credit card practices." (1974 U.S.Code Cong. and Adm.News, pp. 6119, 6152.) Pursuant to the Fair Credit Billing Act, the Federal Reserve Board was directed to issue regulatory rules for the implementation of the Act. In September, 1975, the Board issued amendments to Regulation Z, which implements the Truth-In-Lending Act. In an explanation of those amendments, the Board stated:
"The chief purpose of the Fair Credit Billing Act and of the new Federal Reserve Regulation, is to help consumers resolve credit billing disputes promptly and fairly. The Act prohibits certain practices deemed unfair to consumers using credit cards or other open-end credit accounts and certain practices between credit card issuers and retail merchants deemed to be anticompetitive." (Emphasis added.)
The specific section of Regulation Z that implements 15 U.S.C. § 1666 is section 226.14--"Billing errors--resolution procedure" (12 CFR 226.14.) Subsection g of 226.14 clearly and unequivocally states:
"This section does not apply to credit other than open end, whether or not a periodic statement is mailed or delivered, unless it is consumer credit extended on **1006 an account by use of a credit card." (Emphasis added.)
The Federal Reserve Board, therefore, has, since its implementation of the Fair Credit Billing Act in 1975, consistently interpreted the billing error correction procedure as being applicable only to open-end credit transactions, and, chiefly, to credit card accounts.
The Fair Credit Billing Act was amended in 1980 by the Truth-in-Lending Simplification and Reform Act (P.L. 96-221, tit. V). When the 96th Congress was considering this reform legislation, it had before it Regulation Z of the Federal Reserve Board. In fact, the legislative history of the 1980 act makes specific reference to Regulation Z and demonstrates that the Congress gave careful consideration to its provisions (1980 U.S.Code Cong. and Adm.News, pp. 236, 269-270). Consequently, the Court must infer that, not having taken the opportunity to overrule or otherwise limit the Federal Reserve Board's interpretation in Regulation Z of 15 U.S.C. *167 § 1666 (the billing error correction procedure) as being applicable to open end credit transactions only, Congress intended not to disturb the Board's statutory interpretation and, by implication, adopted it. (Matter of Lockport Union-Sun v. Preisch, 7 A.D.2d 502, 184 N.Y.S.2d 504, revd. on other grnds., 8 N.Y.2d 54, 201 N.Y.S.2d 505, 167 N.E.2d 839; see Helvering v. Reynolds Co., 306 U.S. 110, 59 S.Ct. 423, 83 L.Ed. 536; Matter of Gilmore v. Preferred Acc. Ins. Co., 283 N.Y. 92, 27 N.E.2d 515; see, also, National Elevator Ind. v. Tax Comm., 49 N.Y.2d 538, 427 N.Y.S.2d 586, 404 N.E.2d 709; Matter of Hotel Assn. of New York City v. Weaver, 3 N.Y.2d 206, 165 N.Y.S.2d 17, 144 N.E.2d 14.)
[5] [6] Wherefore, the Court holds that 15 U.S.C. § 1666 is only applicable to transactions under open end credit plans, as defined by 15 U.S.C. § 1602 (subd. [i] ); that, since the transaction in suit was not under such a credit plan, defendant was not obligated to comply with the billing error correction procedures of 15 U.S.C. § 1666; that defendant's noncompliance therewith could not serve as a basis for civil liability under 15 U.S.C. § 1640, and, since § 1640 is the sole basis for liability herein, that the complaint has, therefore, failed to state a cause of action.
Accordingly, motion granted in its entirety; summary judgment dismissing the complaint and action granted, and the complaint and action are dismissed.
N.Y.Sup.,1984.
Jacobs v. Marine Midland Bank, N.A.
124 Misc.2d 162, 475 N.Y.S.2d 1003


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