credit card lawsuits

Credit Card Billing Errors: What You Can Do About It – Alabama Consumer Rights Lawyer Judson E. Crump

April 10, 2019 by Attorney Judson E Crump Leave a Comment

Unauthorized charges appear on credit card statements all the time. It can be financially devastating, but you have important rights.

I recently had a client who had been a DISH Network customer for years, but had cancelled her subscription in January of 2019 and returned all of their equipment (to the customer service representative who came to her house to close the account and uninstall everything). But then she received that nasty surprise 2 months later: a $500 charge on her credit card statement by DISH Network. She was, naturally, very alarmed at this, and immediately telephoned her credit card company to tell them what had happened. The credit card company did nothing. Fortunately, she came to me and we were able to help her resolve the situation.

If this sounds familiar, don’t be surprised. Unauthorized charges appear on credit card statements all the time. And while it often is the result of identity theft or a compromised account, that isn’t always the case. Fortunately, there is a very important law on the books that protects people in this situation: the Fair Credit Billing Act.

The Fair Credit Billing Act (15 U.S.C. Sec. 1666) was enacted back in the 1970s to protect innocent consumers from being held financially liable for money they didn’t spend. It is the federal law that requires credit card companies to have a “zero fraud liability” policy. But the law doesn’t act on its own: it requires YOU to take certain actions to protect yourself if you’ve been the victim of fraudulent or unauthorized transactions.

The central piece of the Fair Credit Billing Act is its dispute resolution scheme. If you see an unauthorized charge on your billing statement, you have 60 days to send the credit card company a written dispute. The dispute must

A) Be received by the credit card company within 60 days of the statement showing the unauthorized charge; 12 CFR 1026.13(b)(1)

B) identify yourself and the account number; 12 CFR 1026.13(b)(2) and

C) Must state precisely what is wrong with the statement; 12 CFR 1026.13(b)(3).

Once they receive your dispute, they have to acknowledge it within 30 days. This is usually a letter that basically says “Hey, we got your dispute. We’re looking into it.”

They then have 2 billing cycles to resolve the error. 12 CFR 1026.13(c)

During the time that they’re investigating your dispute, they are not allowed to report that you’re delinquent if you refuse to pay the disputed charges. Nor can they close your account if you refuse to pay the disputed charges. Note that this only applies to the disputed portion of the charges. So if your bill is for $600, and you have disputed $100 of charges in writing, then you can pay them $500 and still be treated like you’re current.

Once their investigation is complete, they have to send you a written notice of their findings. The investigation must be reasonable, and they must “make appropriate corrections in the account.” 15 U.S.C. 1666(a)(3)(B). If they determine that no error occurred, they have to give you a written explanation why. If they screw it up, you can sue them in federal court to force them to refund your money.

Don’t think that you have to fork out a ton of money to hire a lawyer, either. The Fair Credit Billing Act is part of the Truth in Lending Act, and creditors who violate this law are opening themselves up to a stiff penalty: up to $5,000 of statutory penalties, plus court costs and attorney’s fees. That’s right: if they do you wrong and you sue them, they have to pay your lawyer if you win. So even if your dispute with the credit card company is over a $200 charge, they could be required to pay thousands in attorneys’ fees if you beat them in court. The reason for this is simple: if they could get away with just refunding your money, then they’d never follow the law, because they’d never get sued. But thanks to the fee shifting provision of 15 U.S.C. Sec. 1640, they have to pay your lawyer’s fees if you win.

An experienced consumer rights lawyer in your area can help you take your case to the courts and get the justice you deserve without charging you anything up front.

What is the Statute of Limitations on a Credit Card Lawsuit in Alabama? — Alabama Consumer Credit Lawyer Judson E. Crump

April 10, 2017 by Attorney Judson E Crump 1 Comment

If you’ve defaulted on a credit card, how long can the bank wait to sue you?

Believe it or not, this is a surprisingly complex question. In most lawsuits, the statute of limitations is simple. Car wreck cases have to be filed within two years. Ala. Code Sec. 6-2-38(l). So do fraud cases. Ala. Code Sec. 6-2-3 Truth in Lending Act cases have to be filed within one year. 15 U.S.C. Sec. 1640(e).

But credit card cases aren’t so clear. The reason is that credit cards weren’t invented when Alabama’s statutes of limitations were written, so the laws don’t clearly apply. Is it a contract case? An open account? An account stated? The answer is that it depends on what evidence the credit card company has against the consumer.

In Alabama there are three legal theories that could apply to a credit card lawsuit. A contract case is the one that would seem to fit best. If you have entered a written credit card agreement, then a lawsuit to enforce that agreement should be a contract case, right? Yes. But sometimes, the credit card companies can’t produce the original contract, and without it, the rules of evidence don’t allow extraneous evidence of the terms of the contract. So that makes a contract case impossible to win. A contract case has a statute of limitations of six years.

So if they can’t produce any agreement, they can try to sue for what’s called an “Account Stated.”

“An account stated is a post-transaction agreement. It is not founded on the original liability, but is a new agreement between parties to an original account that the statement of the account with the balance struck is correct and that the debtor will pay that amount. It is as if a promissory note had been given for the balance due.” Ayers v. Cavalry SPV I, LLC., 846 So.2d 474 (Ala. Civ. App. 2003).

Basically, if you have a longstanding account with a bank, store, or credit card company, and they send you statements that you either agree to explicitly or implicity by, say, sending payments, then the law can construe that as an account stated. They’ve “stated” a balance due on an “account,” and you haven’t paid it. But sometimes, the bank or debt collector can’t prove that, either. They have to produce evidence that written statements were actually sent to you and you assented to them somehow. If they can’t produce that evidence, they should lose the case. An Account Stated has a limitations period of six years.

If the Account Stated fails, then they can move down to an “Open Account.” Which is basically just an account of some sort that exists and hasn’t been paid. This doesn’t necessarily require a written contract or written statements (though proving a case without statements is difficult, since a credit card company never has a witness who can say, for instance, ‘I saw Jane Doe swipe this card at Target on June 1, 2009.’).

Of the three legal theories, an Open Account is the easiest to prove. But it has a three year statute of limitations. This means that credit card companies and debt collectors often are too late to take advantage of the easiest form of action.

Very recently, the Alabama Legislature has proposed a bill to extend the open account action to six years. This is a bad idea, and would be more generous to credit card companies (and harmful to struggling working folks) than most states.

Dealing with Requests for Admissions in a Credit Card Lawsuit – Alabama Consumer Credit Attorney Judson E Crump

May 26, 2014 by Attorney Judson E Crump Leave a Comment

Proving a credit card debt can actually be a tricky thing if you have serious opposition. But collection lawyers have a few tricks up their sleeves that you may encounter. One of the worst is a discovery device called “Requests for Admissions.”

What is a request for admissions?

A Request for Admissions is a written demand that you admit or deny specific factual assertions made by the adverse party. So how is it different from just denying the allegations in a complaint? Well, the rules say that you can get in trouble for denying things that the other side later proves to be true. Furthermore, screwing around with a request for admissions can give the court reason to sanction you for doing so. Sounds scary.

But what does it mean in reality? The specifics depend on your state, but usually it means that if you deny something that you’re later shown to have had no basis for denying, you can be made to pay the other side’s attorney fees – in addition to whatever judgment they’re entitled to. Sounds even scarier. But it isn’t. Like most discovery sanctions, it is usually pretty lame in reality. To illustrate why, I’ll use an example.

Bubba is sued by Capital One – the most aggressive credit card company I know of – for $20,000 (plus interest, plus court costs, plus attorneys fees) on a business card that he used for his plumbing business. Bubba denies the allegations in the Complaint, and so Capital One sends some Interrogatories and Requests for Admissions. Now let’s look at two possible scenarios: One where Bubba answers honestly that he owed at least part of the alleged debt, and another where he just flat out denies everything.

In scenario A, Bubba admits part of the debt, Capital One moves for summary judgment based on their affidavits and his admissions, and gets a judgment for $20,000 plus court costs, plus attorney’s fees, plus interest – something like $22,000.

In scenario B, Bubba sends a two page letter telling Capital One that he doesn’t know the answer to most of their questions and denies all of the Requests for Admissions. Capital One gets angry at him and comes to court prepared. Bubba shows up and loses at trial because he doesn’t know what he’s doing. Capital One gets a judgment, but this time they add the costs of the attorney’s fees that they incurred by his failure to admit what they later proved at trial. So now they get a judgment for $20,000 plus court costs, plus attorney’s fees, plus interest PLUS what? Plus the portion of the attorneys’ fees that can be traced back to his failure to admit everything. So instead of a $22,000 judgment, he now faces something like a $22,500 judgment.

The fact is, credit card contracts give the credit card company the right to collect attorneys’ fees and interest at their super high rate anyway. So the amount of heat that the Requests for Admissions penalty isn’t nearly what it would be at, say, a personal injury trial. I’m not telling anyone to make bad faith denials of any discovery request. I just want you to understand that, like many things you may face when dealing with the credit card industry, the truth isn’t quite as scary as some would have you believe.