Justia Banking Opinion Summaries

Under the Fair Debt Collection Practices Act, 15 U.S.C. 1692g(a)(3) a collector must notify the individual from whom it seeks payment that it will assume the validity of the debt unless he disputes it “within thirty days after receipt of the notice.” Diversified wrote to Wallace that it would assume the validity of a debt unless he disputed it “within 30 days of receiving this notice.” Based on the letter’s use of “of” rather than “after,” as in the Act, Wallace sued Diversified. The district court granted the debt collector judgment on the pleadings. The Sixth Circuit affirmed. A collector need not parrot the Act to comply with, but only must communicate with enough clarity to convey the required information to a reasonable but unsophisticated consumer. The Act and the letter mean the same thing. View "Wallace v. Diversified Consultants, Inc." on Justia Law

Congress passed the Durbin Amendment as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, which modified the Electric Funds Transfer Act (EFTA), Pub. L. No. 96-630, 92 Stat. 3641. At issue were two key provisions of the EFTA: section 920(a), which restricted the amount of the interchange fee and section 920(b), which prohibited certain exclusivity and routing priority agreements. Merchant groups challenged the Board's issuance of regulations imposing a cap on the per-transaction fees banks received (section 920(a)) and, in an effort to force networks to compete for merchants' business, requiring that at least two networks owned and operated by different companies be able to process transactions on each debit card (section 920(b)). Merchant groups sought lower fees and even more network competition. The court applied traditional tools of statutory interpretation and held that the Board's rules generally rest on reasonable constructions of the statute. The court remanded one minor issue regarding the treatment of so-called transactions-monitoring costs to the Board for further explanation. Accordingly, the court reversed the district court's grant of summary judgment to the merchants and remanded for further proceedings. View "NACS, et al. v. FRS" on Justia Law

Defendants appealed the district court's order granting Bank of America's motion for summary judgment on their counterclaims for rescission and statutory damages under the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. The court concluded that the district court did not err in determining that defendants' right to rescission had expired and that their rescission claim was time-barred under section 1635 because defendants notified Bank of America of their intent to rescind but failed to file a lawsuit within the three-year period. The court concluded, however, that defendants have offered evidence that Bank of America failed to deliver the TILA disclosures and notices. Therefore, there was a genuine issue of material fact regarding the failure to deliver the required documents. Accordingly, the court affirmed the grant of summary judgment to Bank of America on defendants' counterclaim for rescission; vacated the grant of summary judgment to Bank of America on defendants' counterclaim for statutory damages; and remanded for further proceedings. View "Bank of America v. Peterson, et al." on Justia Law

Target Guest Cards only permit purchases only at Target. Target Visa Cards are all-purpose credit cards that can be used anywhere. Target used different underwriting criteria and agreements for the cards. Between 2000 and 2006, Target sent unsolicited Visas to 10,000,000 current and former Guest Card holders, with agreements and marketing materials to entice activation of the new card. If a customer activated a new Visa, its terms became effective and the Guest Card balance was transferred to the Visa. If the customer did not activate the Visa, Target closed the account. The materials did not suggest that keeping the Guest Card was an option, but customers could opt out. A Guest Card holder could call Target to reject the Visa but ask to keep the Guest Card. If a holder attempted to use the Guest Card after the Visa was mailed, she was informed that the account had been closed but that she could reopen it. The credit limits on the Autosubbed Visas were between $1,000 and $10,000, and Target could change the credit limit. New customers had to open a Target Visa through a standard application, and cards could have credit limits as low as $500. The Autosub materials did not indicate that credit limits were subject to change; customers often had their credit limits reduced after activation. The district court rejected a putative class action under the Truth in Lending Act, 15 U.S.C. 1642, which prohibits mailing unsolicited credit cards and requires credit card mailings to contain certain disclosures in a “tabular format.” The Seventh Circuit affirmed. View "Acosta v. Target Corp." on Justia Law

Plaintiffs filed suit against Countrywide, alleging violation of the Missouri Second Mortgage Loan Act (MSMLA), 516.231 to 408.241 RSMo. On appeal, plaintiffs challenged the district court's dismissal of their claims as barred by the three-year statute of limitations of section 516.130(2). The court concluded that the MSMLA was subject to the three-year limitations period of section 516.130(2), not the six-year statute of limitations under section 516.420, pursuant to Rashaw v. United Consumers Credit Union. The court also concluded, under Missouri law, that the "entire damage" to plaintiffs was capable of ascertainment "in a single action" and the "continuing or repeated wrong" exception did not apply in this case. Accordingly, the court affirmed the judgment of the district court. View "Washington, et al. v. Countrywide Home Loans, Inc." on Justia Law

In 1989, Seamans received a Federal Perkins Loan of $1,180.00 from Temple University. The first payment was due in 1992. The loan was declared delinquent the following month. Nonths later, Temple notified Seamans that the account had been placed for collection. In 2010, Seamans enrolled at Drexel University. He sought a Pell Grant, but Drexel refused to provide with financial assistance until Seamans repaid the Temple Loan. In 2011, Seamans repaid that loan in full. Seamans then noticed a “trade line” on his credit report. The trade line may or may not have appeared on his credit report when the account was in default. Seamans formally disputed some of the information by contacting the credit reporting agency. Temple, had its loan servicer investigate, but resubmitted information virtually unchanged. Seamans again contacted Temple and credit agencies, to dispute the trade line. After a second investigation, Temple modified certain elements, but still did not report various details. There was evidence that Temple treated other disputes in a similar manner. Seamans sued, alleging that Temple negligently or willfully violated the Fair Credit Reporting Act, 15 U.S.C. 1681–1681x. The district court granted Temple summary judgment, finding that the Higher Education Act, 20 U.S.C. 1001–1155, exempted Temple from FCRA compliance because the credit instrument was a Perkins Loan. The Third Circuit vacated, stating that Seamans’s dispute appears to have merit and that failure to report the dispute may constitute a material inaccuracy on his credit report. View "Seamans v. Temple University" on Justia Law

Beginning in 1998, consumer class actions were filed against Trans Union alleging violation of the Fair Credit Reporting Act, 15 U.S.C. 1681, by selling consumer information to target marketers and credit and insurance companies. The court approved a settlement. Trans Union agreed to give all class members “basic” credit monitoring services. Class members could also either claim cash from a $75 million fund or claim “enhanced” in-kind relief consisting of additional financial services. Trans Union was to provide $35 million worth of enhanced relief. The class was estimated at 190 million people. The Act authorizes damages of between $100 and $1000 per consumer for willful violations, so Trans Union faced theoretically possible liability of $190 billion. To persuade the court to approve the settlement, the parties agreed to an unusual provision that preserved substantive claims after settlement. Instead of releasing their claims, class members who did not get cash or enhanced in-kind relief retained the right to bring individual claims. Trans Union also partially waived the limitations period. The settlement authorized reimbursements from the fund to Trans Union itself “equal to any amounts paid to satisfy settlements or judgments arising from Post-Settlement Claims,” not including defense costs. There have been more PSCs than expected, depleting the fund. In a second appeal, the Seventh Circuit affirmed the orders authorizing disbursement of the remainder of the fund. View "Wheelahan v. Trans Union LLC" on Justia Law

Plaintiffs received letters from defendants that stated: Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid. If you notify this office within 30 days from receiving this notice, this office will obtain verification of the debt or obtain a copy of the judgment and mail you a copy of such judgment or verification. The Fair Debt Collection Practices Act, 15 U.S.C 1692g(a) requires the debt collector to include “a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector” and a “statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector.” Plaintiffs claimed noncompliance because the notice omits the phrase “that the debt, or any portion thereof, is disputed.” One letter referred to “your just debt;” the recipient alleged that the phrase suggests that the debt’s validity has been confirmed. Four trial courts dismissed. The Seventh Circuit affirmed, stating that any written request for verification constitutes a dispute for purposes of the Act. The reference to “just debt” was mere puffery. View "Borucki v. Vision Fin. Corp." on Justia Law

Plaintiffs, a class of cardholders who paid credit card penalty fees, challenged those fees on constitutional grounds. Plaintiffs argued that the fees are analogous to punitive damages imposed in the tort context and are subject to substantive due process limits described in BMW of North America, Inc. v. Gore. The court concluded that the due process analysis developed in the context of jury-awarded punitive damages was not applicable to contractual penalty clauses. Further, there was no derivative liability under the Unfair Competition Law. Accordingly, the district court did not err in dismissing the complaint where constitutional due process jurisprudence did not prevent enforcement of excessive penalty clauses in private contracts and the fees were permissible under the National Bank Act, 12 U.S.C. 85-86, and the Depository Institutions Deregulation and Monetary Control Act (DIDMCA), 12 U.S.C. 1831d(a). View "In re: Late Fee & Over-Limit Fee Litigation" on Justia Law

Plaintiffs, property owners, filed an action against Defendant, a bank, alleging eleven counts of state law violations for Defendant’s decision to deny Plaintiffs’ application for a loan modification under the Home Affordable Modification Program and to foreclose on Plaintiffs’ home. The district court granted Defendant’s motion to dismiss. The First Circuit Court of Appeals affirmed the district court’s dismissal of Plaintiffs’ amended complaint, holding that the district court properly dismissed Plaintiffs’ claims for breach of the implied obligation of good faith and fair dealing, violation of the Massachusetts Consumer Credit Cost Disclosure Act, rescission, negligence, and promissory estoppel. View "MacKenzie v. Flagstar Bank, FSB" on Justia Law