The U.S. Court of Appeals for the Ninth Circuit recently held that a creditor violated the federal Fair Credit Billing Act ("FCBA"), and Oregon's Unlawful Debt Collection Practices Act ("UDCPA"), when it reported a debt as delinquent to credit agencies and continued its collection activities without first providing an explanation to the debtor who had contested the debt.
According to the Ninth Circuit: (1) these alleged actions by the creditor violated the Oregon UDCPA, based on the alleged violation of the FCBA;
(2) the debtor was entitled to actual damages and attorney fees under the FCBA, regardless of whether the debtor demonstrated detrimental reliance on the representations made by the creditor; (3) TILA's limitation of a single recovery for multiple failures to disclose does not necessarily apply to the FCBA; and (4) the trial court failed to properly apportion an attorneys fee award as to the debtor's successful claims.
A copy of the opinion is available at:
This case arose from a misunderstanding regarding a $645 charge on the credit-card bill of the debtor. The creditor allegedly misidentified the basis for the charge but then allegedly failed to respond to the debtor's requests for information about it. The creditor allegedly continued to seek payment and reported the debt as delinquent to credit agencies, despite the debtor's alleged protest.
In doing so, the Ninth Circuit noted that creditor admittedly violated the federal Fair Credit Billing Act ("FCBA"). After unsuccessfully attempting to get a direct response from the creditor, the debtor filed an action in the District of Oregon, alleging inter alia claims under the FCBA and Oregon's Unlawful Debt Collection Practices Act ("UDCPA").
The trial court dismissed the UDCPA claim and limited the debtor's total recovery under the FCBA to $1000. The Ninth Circuit reversed.
According to the Ninth Circuit, if a credit card holder sends a written notice disputing a charge within sixty days of receiving a bill, FCBA requires a credit-card issuer to acknowledge the dispute within thirty days, investigate the matter, and provide a written explanation of its decision within ninety days. If a creditor fails these requirements, it is subject to civil liability and forfeiture of the disputed amount.
Similarly, the Ninth Circuit held, the Oregon UDCPA prohibits a debt collector from "[a]ttempt[ing] to or threaten[ing] to enforce a right or remedy with knowledge or reason to know that the right or remedy does not exist."
Examining the above statutes, the Court concluded that the trial court erred in holding that the debtor failed to state a claim under the Oregon UDCPA. The Court reasoned, that pursuant to the requirements imposed under the FCBA, the creditor did not have the right to attempt to collect the disputed charge or to report it to credit agencies as delinquent without first providing a written explanation. These allegations, the Court held, also violated the Oregon UDCPA.
The Court also rejected that a detrimental reliance component was required for the debtor's Oregon UDCPA allegations, reasoning that there was simply no relevant disclosure or conduct under these circumstances that the debtor could have relied upon. Thus, the debtor's lack of detrimental reliance was immaterial to a determination of whether the creditor's violations resulted in actual damages. Debtors, explained the Court, cannot rely on unmade explanations. Otherwise, creditors could simply avoid actual damages under FCBA by never responding to billing disputes.
Next, the Court determined that the creditor's collection actions and adverse credit reports were not subject to the single-recovery limitation under 15 U.S.C. 1640(g). Further, the Court also concluded that the debtor was entitled to all reasonable attorney fees, including those incurred for the appeal, related to the debtor's FCBA claims.
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