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Debt Collection Defense | Consumer Protection Blog

DEFENSES TO DEBT COLLECTION LAWSUITS BY CREDIT CARD ISSUERS

CREDIT CARD HOLDERS ARE NOT RESPONSIBLE FOR THE UNAUTHORIZED USE OF THEIR CREDIT CARDS

dealing with a credit card collection summons

The "Unauthorized Use" Defense to a Credit Card Collection Lawsuit

Each month, thousands of consumers are faced with abusive and improper lawsuits by credit card issuers for credit card debt that stems from charges that were not authorized by the consumers. Sometimes, the charges are the result of the card issuer's blatant negligence in failing to detect unauthorized use of the account. In other circumstances, credit card issuers bring lawsuits against consumers that are prohibited by a federal law known as the Consumer Credit Protection Act (CCPA). Under 15 USCS § 1643 of the CCPA, a cardholder's liability for unauthorized charges is limited to $50.00. All credit cards, whether used for business or consumer purposes, are covered by the $50 liability limit

Credit Card Issuer Cannot Bring a Collection Lawsuit If It Has Failed to
Respond to a Consumer's Written Notice of Billing Errors

Credit Card Companies Must Respond to Billing Disputes or the Forfeit Their Right to Collect the Disputed Amounts

Pursuant to Section 15 USCSA § 1643 of the CCPA ("Correction of Billing Errors"), a credit card issuer must respond to a consumer's written notice of billing errors in a credit card statement. If you believe that your credit card statement has errors, the law provides you with sixty days to provide your credit card issuer with written notice that its statement is erroneous. Once you provide this written notice, the credit card company has thirty days within which it must send you a written acknowledgment confirming that you have disputed the charge. Within two billing cycles, the credit card issuer must either correct the billing errors or send a written explanation to the consumer explaining why the issuer believes that the billing statement is correct, after the credit card issuer has conducted an investigation of the charges. In addition, if your credit card issuer refuses to reverse the disputed charges, you are entitled to receive "copies of documentary evidence" that the issuer used in making its determination.

Defense to Credit Card Lawsuit: Purchased Goods Were Not Delivered

If you provide your credit card issuer with written notice that you did not receive merchandise or services that you purchased with your credit card, your credit card issuer must conduct an investigation and it may not uphold the charges unless it "determines that such goods were actually delivered, mailed, or otherwise sent to the obligor and provides the obligor with a statement of such determination."

$50.00 Cap on Liability for Unauthorized Use of Credit Card

§ 1643. Liability of holder of credit card

(a) Limits on liability.
(1) A cardholder shall be liable for the unauthorized use of a credit card only if-
(A) the card is an accepted credit card;
(B) the liability is not in excess of $50;
(C) the card issuer gives adequate notice to the cardholder of the potential liability;
(D) the card issuer has provided the cardholder with a description of a means by which the card issuer may be notified of loss or theft of the card, which description may be provided on the face or reverse side of the statement required by section 127(b) [15 USCS § 1637(b)] or on a separate notice accompanying such statement;
(E) the unauthorized use occurs before the card issuer has been notified that an unauthorized use of the credit card has occurred or may occur as the result of loss, theft, or otherwise; and
(F) the card issuer has provided a method whereby the user of such card can be identified as the person authorized to use it.
(2) For purposes of this section, a card issuer has been notified when such steps as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information have been taken, whether or not any particular officer, employee, or agent of the card issuer does in fact receive such information.
(b) Burden of proof. In any action by a card issuer to enforce liability for the use of a credit card, the burden of proof is upon the card issuer to show that the use was authorized or, if the use was unauthorized, then the burden of proof is upon the card issuer to show that the conditions of liability for the unauthorized use of a credit card, as set forth in subsection (a), have been met.
(c) Liability imposed by other laws or by agreement with issuer. Nothing in this section imposes liability upon a cardholder for the unauthorized use of a credit card in excess of his liability for such use under other applicable law or under any agreement with the card issuer.

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