Argued: September 27, 2017
Appeal from the United States District Court for the Middle
District of Pennsylvania (M.D. Pa. No. 4-16-cv-00830)
Honorable Matthew W. Brann, U.S. District Judge
M. Freeman Carlo Sabatini Sabatini Law Firm Counsel for
Michael C. Falk Reed Smith LLP Three Logan Square
Philadelphia, Counsel for Appellee
Before: AMBRO and KRAUSE, Circuit Judges, and CONTI, Chief
District Judge [*]
KRAUSE, Circuit Judge.
same day Appellant William Krieger fell victim to a credit
card scam and discovered a fraudulent $657 charge on his
bill, he protested to his card issuer, Bank of America
(BANA),  and was told both that the charge would be
removed and that, pending "additional information,
" BANA considered the matter resolved. And indeed,
Krieger's next bill reflected a $657 credit. But over a
month later Krieger opened his mail to some particularly
unwelcome additional information: BANA was rebilling him for
the charge. He disputed it again, this time in writing, but
after BANA replied that nothing would be done, he paid his
monthly statement and then filed this action, alleging BANA
violated two consumer protection laws: the Fair Credit
Billing Act, which requires a creditor to take certain steps
to correct billing errors, and the unauthorized-use provision
of the Truth in Lending Act, which limits a credit
cardholder's liability for the unauthorized use of a
credit card to $50. The District Court granted BANA's
motion to dismiss the operative complaint after determining
Krieger had failed to state a claim as to either count.
Because we conclude the District Court's decision was
contrary to the text, regulatory framework, and policies of
both statutes, we will reverse.
enacted the Truth in Lending Act (TILA or Act), Pub. L. No.
90-321, 82 Stat. 146 (1968) (codified as amended at 15 U.S.C.
§§ 1601-1667f), in response to "widespread
consumer confusion about the nature and cost of credit
obligations." Gennuso v. Commercial Bank & Tr.
Co., 566 F.2d 437, 441 (3d Cir. 1977). TILA's
express purpose is to "assure a meaningful disclosure of
credit terms so that the consumer will be able to compare
more readily the various credit terms available to him and
avoid the uninformed use of credit." 15 U.S.C. §
1601(a). Serving to "even the often slanted credit and
lending playing field, " Vallies v. Sky Bank,
432 F.3d 493, 495 (3d Cir. 2006), as amended on
reh'g (Feb. 1, 2006), and to "guard against the
danger of unscrupulous lenders taking advantage of consumers
through fraudulent or otherwise confusing practices, "
Ramadan v. Chase Manhattan Corp., 156 F.3d
499, 502 (3d Cir. 1998), the Act, in simplest terms,
"reflects a transition in congressional policy from a
philosophy of 'Let the buyer beware' to one of
'Let the seller disclose, '" Mourning v.
Family Publ'ns Serv., Inc., 411 U.S. 356, 377
further that policy, TILA generally requires that a creditor
in a consumer transaction disclose, among other things:
"(1) the identity of the creditor; (2) the amount
financed; (3) the finance charge; (4) the annual percentage
rate; (5) the sum of the amount financed and the finance
charge, or total of payments; [and] (6) the number, amount,
and due dates or period of payments scheduled."
Cappuccio v. Prime Capital Funding LLC, 649 F.3d
180, 188 (3d Cir. 2011), as amended (Sept. 29, 2011)
(internal quotation marks omitted). Creditors also must
provide "explanations and definitions" of each of
those terms, id., as well as information regarding
"borrowers' rights, " Koons Buick Pontiac
GMC, Inc. v. Nigh, 543 U.S. 50, 54 (2004). All of this
information, the Act mandates, must be disclosed
"clearly and conspicuously, " that is, "in a
reasonably understandable form and readily noticeable to the
consumer." Rossman v. Fleet Bank (R.I.) Nat'l
Ass'n, 280 F.3d 384, 390 (3d Cir. 2002).
TILA offers a "range of remedies to achieve its goals,
" Vallies v. Sky Bank (Vallies II),
591 F.3d 152, 156 (3d Cir. 2009), central among them are
consumer suits, which Congress sought to "encourag[e] .
. . to deter violations of the Act, " Johnson v. W.
Suburban Bank, 225 F.3d 366, 374-75 (3d Cir. 2000). TILA
provides a private right of action, 15 U.S.C. § 1640(a),
to all "consumers who suffer damages as a result of a
creditor's failure to comply with TILA's
provisions." Household Credit Servs., Inc. v.
Pfennig, 541 U.S. 232, 235 (2004). Section 1640(a)
permits recovery of actual damages, statutory damages, costs,
and attorneys' fees, and, as relevant here, may be used
as a basis for a claim against "any creditor who fails
to comply with any requirement imposed under [15 U.S.C.
§§ 1631-1651], including any requirement under . .
. [15 U.S.C. §§ 1666- 1666j]."
case involves two of those requirements: (1) a TILA provision
known as the "Fair Credit Billing Act, " which
requires a creditor to comply with particular obligations
when a consumer has asserted that his billing statement
contains an error, 15 U.S.C. § 1666; and (2) TILA's
unauthorized-use provision, which requires a credit card
issuer to satisfy certain conditions before holding a
cardholder liable for the unauthorized use of a credit card,
including limiting the cardholder's liability to $50, 15
U.S.C. § 1643.
The Fair Credit Billing Act
after enacting TILA, Congress amended it by way of the Fair
Credit Billing Act (FCBA), Pub. L. No. 93-495, 88 Stat. 1511
(1974) (codified as amended at 15 U.S.C. §§
1666-1666j). Building on TILA's original goal of
"requir[ing] . . . full disclosure of credit charges . .
. so that the consumer can decide for himself whether the
charge is reasonable, " S. Rep. No. 90-392, at 1 (1967),
the FCBA aims to "protect the consumer against
inaccurate and unfair credit billing and credit card
practices, " 15 U.S.C. § 1601(a). As relevant here,
the FCBA imposes on creditors "requirements . . . for
the correction of billing errors." Am. Express Co.
v. Koerner, 452 U.S. 233, 234 (1981).
"primary" such requirement, at issue in this case,
is that if a creditor receives "written notice"
from a consumer that "indicates [his] belief that [his]
statement contains a billing error" within 60 days after
the creditor transmitted that statement, the creditor must
comply with "two separate obligations."
Id. at 234, 236 (citing 15 U.S.C. § 1666(a)).
First, within 30 days of receiving that written notice, it
must acknowledge receipt to the consumer in writing. 15
U.S.C. § 1666(a)(3)(A). Second, within two billing
cycles and "in no event later than ninety days"
after the consumer files his written dispute, it must either
(1) "make appropriate corrections" to the
consumer's account, "including the crediting of any
finance charges on amounts erroneously billed, " or (2)
"conduct an investigation" into the dispute and
"send a written explanation" to the consumer
"setting forth to the extent applicable the reasons why
the creditor believes the account . . . was correctly shown
in the statement." Id. §
1666(a)(3)(B)(i)-(ii). The creditor must take these steps
"before making any attempt to collect the disputed
amount." Am. Express, 452 U.S. at 237.
TILA's Unauthorized-Use Provision
the FCBA applies to all creditors, including credit card
issuers, Congress elsewhere amended TILA to include another
layer of protection specifically for consumers who use credit
cards. Act of Oct. 26, 1970, Pub. L. No. 91-508, 84 Stat.
1114, 1126-27. Responding in part to the
then-"relatively recent development" of unsolicited
credit cards, S. Rep. No. 91-739, at 2 (1970), Congress also
took aim with these amendments at an issue "associated
not only with unsolicited credit cards but with all credit
cards-the problem of liability in the event the card is lost
or stolen, " id. at 5. Because, even after TILA
was enacted, "[m]ost credit card agreements" held a
consumer liable for any losses incurred by the unauthorized
use of a credit card before the consumer had notified the
issuer that the card had been lost or stolen, Congress
recognized that a consumer's failure to "immediately
discover and report" a loss or theft could result in his
being held liable for "thousands of dollars in
unauthorized purchases made by a fast working thief."
Id. What's more, there was "little
incentive" for card issuers to "take precautionary
action" because any such liability could "always be
passed on to the cardholder." Id.
this problem, Congress enacted 15 U.S.C. § 1643,
entitled "Liability of holder of credit card, " to
"safeguard the consumer . . . by limiting the liability
of consumers for the unauthorized use of credit cards."
S. Rep. No. 91-739, at 1. The statute accomplishes this goal
by "plac[ing] the risk of fraud primarily on the card
issuer, " and requiring the issuer to "demonstrate
that it has taken certain measures to protect the cardholder
from fraud before it can hold a cardholder liable for any
unauthorized charges." DBI Architects, P.C. v. Am.
Express Travel-Related Servs. Co., 388 F.3d 886, 892
(D.C. Cir. 2004). Under § 1643, an issuer may hold a
cardholder liable for the unauthorized use of a card
"only if" certain conditions are met. 15 U.S.C.
of those conditions feature here. First, for liability to be
imposed by the issuer, it must have given the cardholder
"adequate" notice both of his potential liability
and of how to notify the issuer in the event of the loss or
theft of the card before the unauthorized use. Id.
§ 1643(a)(1)(C)- (D). Second, the issuer may only impose
liability for unauthorized use that "occurs before the .
. . issuer has been notified that an unauthorized use of the
credit card has occurred or may occur." Id.
§ 1643(a)(1)(E). Finally, any liability imposed may not
be "in excess of $50." Id. §
1643(a)(1)(B). The requirement that an issuer meet these
conditions before imposing liability is a strict one:
"Except as provided in [§ 1643], a cardholder
incurs no liability from the unauthorized use of a credit
card." Id. § 1643(d).
TILA's framework in mind, we now turn to the facts of
is an appeal from a grant of a motion to dismiss, the factual
allegations are taken from the operative amended complaint
and are accepted as true. Trzaska v. L'Oreal USA,
Inc., 865 F.3d 155, 162 (3d Cir. 2017). In June 2015,
soon after William Krieger noticed his home computer had
stopped working, he received a phone call from an individual
identifying himself as a Microsoft employee and telling
Krieger his computer had a virus and the caller needed to
access the computer remotely to fix it. Krieger acquiesced,
but, while the caller was accessing the computer,
Krieger's daughter arrived home and, upon learning what
was happening, suggested the call was "probably a
scam" and disconnected the computer. App. 27. As she did
so, Krieger saw his Bank of America credit card number flash
across the screen.
Krieger called Microsoft, only to learn that the original
caller was not a Microsoft employee. Krieger then called BANA
to check whether the incident had resulted in any
unauthorized charges on his credit card. The call confirmed
his fears: a $657 Western Union money transfer had just been
purchased on his card. Although Krieger protested to
BANA's representative that the money transfer was
unauthorized and that his account was "compromised,
" he was told that, until he received his next monthly
billing statement, "nothing could be done." App.
enough, when Krieger received his next BANA statement, around
July 29, it included the $657 Western Union charge.
Consistent with the instructions he was given earlier, he
called BANA again. During that July 29 call, however, Krieger
was again told BANA "could do nothing, " this time
because Western Union had "already authorized the
payment." App. 29. Now "no longer happy" with
BANA, Krieger told the representative he wished to cancel his
account entirely. App. 29. That, apparently, caused BANA to
hours later, BANA called Krieger back with a change in plans:
BANA offered to "credit [his] account while it conducted
an investigation on the unauthorized use." App. 29. And
within a few days, it sent Krieger a letter confirming,
pursuant to that call, that it had "issued [a] credit
to [his] account for the disputed charge" that
"w[ould] appear on [his] monthly statement, " and
that, while Western Union would "have the opportunity to
review the information and provide additional documentation
to support why they feel the transaction is valid, "
BANA "consider[ed] [the] dispute resolved." App.
46. On Krieger's next statement, in mid-August, a