Tenth Circuit Decision Underscores Limits of FCBA

When a plaintiff sued two credit card companies for a large purchase that never materialized, the district court tossed his claim because he paid the credit balances. An appellate court affirmed the lower court in what is a reminder of the limits of federal credit card protections.

In a Jan. 26 decision, the 10th Circuit Court of Appeals upheld district court dismissals of a plaintiff’s Fair Credit Billing Act lawsuits against credit card companies for products he bought but didn’t receive. He lacked a claim against the companies under the FCBA, the court held, because he’d paid the outstanding balance for the purchases. The case is a warning of the risks that entities take on when they make large buys on credit for products they don’t immediately receive.

Malik Hasan purchased more than $1 million of wine from supplier Premier Cru using credit issued by Chase Bank and American Express, But Premier Cru later filed for bankruptcy and only fulfilled a fraction of Hasan’s orders.

Hasan filed an initial proof of claim with the Premier Cru bankruptcy proceedings. He contested a settlement that would allow the wine seller to liquidate its remaining inventory and spread the proceeds among all claimants, but the bankruptcy court approved it. This resulted in a loss that the plaintiff has been trying to recover through other means.

To read this story and other complete articles featured in the February 5, 2017 print edition of Law Week Colorado, copies are available for purchase online.