Fair Credit Billing Act – Billing Errors

June 4th, 2018 by Rieders Travis in Contracts

Krieger v. Bank of America, N.A., No. 17-1275 (3d Cir. May 16, 2018) Krause, C.J.  The same day Appellant William Krieger fell victim to a credit card scam and discovered a fraudulent $657 charge on his bill, he protested to his card issuer, Bank of America (BANA), 1 and was told both that the charge would be removed and that, pending “additional information,” BANA considered the matter resolved. And indeed, Krieger’s next bill reflected a $657 credit. But over a month later Krieger opened his mail to some particularly unwelcome additional information: BANA was rebilling him for the charge. He disputed it again, this time in writing, but after BANA replied that nothing would be done, he paid his monthly statement and then filed this action, alleging BANA violated two consumer protection laws: the Fair Credit Billing Act, which requires a creditor to take certain steps to correct billing errors, and the unauthorized-use provision of the Truth in Lending Act, which limits a credit cardholder’s liability for the unauthorized use of a credit card to $50. The District Court granted BANA’s motion to dismiss the operative complaint after determining Krieger had failed to state a claim as to either count. Because we conclude the District Court’s decision was contrary to the text, regulatory framework, and policies of both statutes, we will reverse.

We conclude that a cardholder incurs “liability” for an allegedly unauthorized charge when an issuer, having reason to know the charge may be unauthorized, bills or rebills the cardholder for that charge. When an issuer does so, it must comply with the requirements of § 1643, and when a cardholder alleges those requirements were violated, those allegations may state a claim under § 1640. Krieger has stated such a claim, and we will reverse the District Court’s decision to the contrary.