Our San Bernardino County predatory lending lawyers were interested to see a recent case here in the Ninth Circuit about to what extent consumers may recover damages when credit card companies break the law. In Lyon et al. v. Chase Bank USA, N.A., Chase bank gave plaintiff Barbee Lyon incorrect information about the basis for a $645 charge on his credit card bill. The company then failed to respond to his requests for information, and ultimately incorrectly reported the debt as delinquent in violation of multiple parts of the Fair Credit Billing Act. Lyon and his wife, Joan Kruse, sued in Oregon federal court under the FCBA and Oregon's Unlawful Debt Collection Practices Act. The Oregon court dismissed the UDCPA claims and limited Lyon's damages under the FCBA to just $1000. The Ninth U.S. Circuit Court of Appeals reversed both of those decisions. Lyon had a Chase credit card in his wallet when it was stolen in 2006; Kruse was an authorized user on that card. In discussions with Chase, Lyon said a $645 charge was legitimate, but Chase reversed it anyway and Lyon paid it with another card. However, in the confusion, Chase incorrectly credited Lyon with $645. Later, it added a $645 charge to Lyon's bill that it identified as for payment to the same original creditor (who had actually been paid with another card). Not realizing that Chase was only trying to correct its own mistake, Lyon disputed this charge under the FCBA. That law requires credit grantors to acknowledge the dispute within 30 days and respond in writing within 90 days and before collecting the disputed debt. Grantors may not report disputed debts as past due. Nonetheless, Chase failed to respond to multiple letters from Lyon within the 90 days, including a letter Lyon sent after he figured out what happened and was trying to confirm it. During this time, Chase continued to try to collect the debt, charged Lyon interest and reported it as delinquent to the credit agencies. The couple sued under the FCBA and Oregon's UDCPA, the state version of the federal Fair Debt Collection Practices Act. The trial court found that while the facts supported the UDCPA claim, the language of the complaint did not state a claim. It dismissed the FCBA complaint as to Kruse but moved toward trial as to Lyon. However, in pre-trial motions, the court permitted Chase to limit evidence of multiple FCBA violations, after it argued that Lyon could only collect statutory damages once; and held that Lyon had to prove actual reliance on Chase's statements to collect actual damages. As Chase had never made any statements, this killed Lyon's case for actual damages. It awarded $1000 in statutory damages and attorney fees, but quashed the attorney fees award when the bills did not separate work specifically enough. Lyon and Kruse appealed the UDCPA claim and the FCBA rulings. On the UDCPA claim, the Ninth Circuit drilled to the heart of the matter by noting that the UDCPA prohibits debt collectors from attempting to collect a debt with no right to do so. This claim was predicated on Chase's acknowledged violations of the FCBA — failing to respond in writing to Lyon's dispute and still attempting to collect the debt. Relying on Oregon caselaw, the Ninth found that this was enough to state a claim under the UDCPA. The trial court was wrong to find that Lyon was disputing that he owed money; indeed, one of his later letters said he believed he did. The appeals court then moved on to the FBCA claims. Chase acknowledges that it violated the law, but the trial court found that Lyon had to prove actual reliance on Chase's statements in order to collect actual damages. The Ninth Circuit disagreed, saying the court was incorrectly applying Truth in Lending Act precedent to a FCBA case. If this interpretation were to stand, the court noted, FCBA cases would never exist because banks could simply refuse to respond to disputes — exactly what the FCBA was designed to prevent. For similar reasons, the Ninth declined to apply TILA's limitation on one statutory damages award for multiple violations of the law to the multiple FCBA violations here. Finally, the Ninth found that because it reversed the trial court's findings on the merits, Lyon was entitled to additional attorney fees. Thus, it reversed and remanded all of the claims raised on appeal. As Fullerton predatory lending attorneys, we're pleased to see that the Ninth Circuit appreciates the importance of the FCBA. If the court had ruled the way Chase suggested, it would have allowed credit card companies to simply ignore the law without consequences. Or, as the court put it, they would "find that silence is truly golden." There is already such a large imbalance between the power and information available to consumers and that available to large credit card companies that the deck is stacked against consumers. That's part of why laws like the FCBA, TILA, FDCPA and other consumer protection laws exist. Our Gardena predatory lending lawyers represent people across California who are alleging violations of these laws by lenders, including mortgage lenders as well as credit card companies.
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