Lyon v. Chase Bank USA

The mistaken collection of a previously paid debt in violation of the Fair Credit Billing Act (“FCBA”) may allow recovery under Oregon’s Unlawful Debt Collection Practices Act (“UDCPA”) regardless of whether or not there was an actual debt or not.

In 2003 while on vacation, Barbee Lyon reported to Chase Bank that his card was stolen. Lyon cancelled the card and notified Chase that a $645 charge left on the card was valid. Chase stopped payment on all charges and after being contacted directly by a resort about his balance, Lyon paid the $645 balance with another credit card. Chase, in trying to correct its mistake, issued Lyon a new credit card and carried over the $645 balance onto the new card. Having already paid the debt, Lyon disputed the charge on his new card. After refusing to pay until the dispute was acknowledged, Chase reported Lyon to the credit agencies as having a delinquent debt. Lyon filed a complaint in the district court alleging that Chase had violated the Fair Credit Billing Act (“FCBA”) and Oregon’s Unlawful Debt Collection Practices Act (“UDCPA”). The district court dismissed the theories of recovery under state law, limited damages under federal law to $1,000, and denied Lyon attorneys’ fees. The Ninth Circuit held that the UDCPA claims were wrongfully dismissed, as they were grounded in a rightful action under the FCBA. The Court held that damages were not limited to the single statutory penalty under § 1640(g) as the language in the relevant FCBA subsections did not indicate that Chase’s violations would involve disclosures, leaving open the possibility of recovery on each violation. No detrimental reliance was required to be shown, as the violations were statutory. Attorney’s fees that were filed with the court were reasonable and statutorily mandated. REVERSED and REMANDED.