Defendant Wells Fargo issued a credit card to two consumers, who agreed to be equally responsible for the repayment of charges on the card. One of the consumers subsequently added plaintiff as an authorized user on the credit card account. The authorized user had numerous disputed charges on the account, each time resolving the disputes with Wells Fargo, who believed the authorized user to be the attorney of the two consumers. When Wells Fargo discovered that the authorized user was writing on his own behalf, and not as the attorney of the two consumers, it ceased discussions with him regarding billing disputes. The authorized user then sued Wells Fargo for damages under, among other things, the Fair Credit Billing Act for seven billing disputes that Wells Fargo did not resolve with him. The district court found in favor of Wells Fargo and this appeal followed.
In upholding the district court's ruling in favor of Wells Fargo, the Ninth Circuit noted that, under TILA, a credit card issuer owes an obligation to respond to, investigate and resolve disputes regarding purchases and this appeal required them to determine to whom that obligation is owed. The billing dispute duties under TILA run to the "obligor," but neither TILA nor the regulations promulgated thereunder define the term "obligor." Accordingly, the Court looked to the standard legal definition, which defines obligor as "one who is obligated to pay a debt." The Court noted that at no time was the authorized user obligated to pay the debt, and therefore under TILA the authorized user was not entitled to the procedures owed to the obligors.
The Court noted, however, that TILA's implementing regulations were not as straightforward, as they make the duty to resolve billing disputes run to a "consumer," rather than to the "obligor." Under the relevant regulations, a consumer is defined as a "cardholder or natural person to whom consumer credit is offered or extended." In interpreting the regulations as they apply to billing disputes, the Court found that "[w]hether Regulation Z and the Official Staff Commentary impose on Wells Fargo a duty to communicate with the consumer, or even if [the authorized user] is the consumer for this purpose, is not ascertainable with certainty," but, "without much confidence," concluded that even if the authorized user was a "consumer" in the ordinary sense of the word, "he is not a 'consumer' in the bizarre usage of Regulation Z."
Ralph T. Wutscher
Kahrl Wutscher LLP
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