rather than in a "statement of an extension of credit" provided
to the obligor. 15 U.S.C. § 1666(b). Thus, the error in Doyle
indeed did not fall within the plain language of the statute,
since notices sent to third parties are not errors in a
"statement reflecting an extension of credit," and hence not
"billing errors." Id. Doyle, therefore, lends no support to
Associates's argument, considering that this is a case where a
statement, allegedly in error, was mailed to plaintiff by
defendant, demanding payment.
Instead, this case presents an issue which appears to be one of
first impression in the federal courts, namely whether the
"Wrong-Person Error" alleged by plaintiff is encompassed by §
1666(b). It is necessary, therefore, to look first to the
language of the statute. In doing so, it must be remembered that
TILA is a remedial act intended to protect consumers, see
15 U.S.C. § 1601(a) ("It is the purpose of this subchapter . . . to
protect the consumer against inaccurate and unfair credit billing
and credit card practices."), and, as such, its provisions are to
be construed liberally in favor of consumers. See Ellis v.
General Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir.
1998) (holding TILA is remedial legislation which should be
"construed liberally in order to best serve Congress' intent");
Begala v. PNC Bank, Ohio, Nat'l Ass'n, 163 F.3d 948, 950 (6th
Cir. 1998), cert. denied, ___ U.S. ___, 120 S.Ct. 166, 145
L.Ed.2d 141 (1999) ("TILA is a remedial statute and, therefore,
should be given a broad liberal construction in favor of the
consumer."); N.C. Freed Co. v. Board of Governors of Fed.
Reserve Sys., 473 F.2d 1210, 1214 (2d Cir. 1973) (holding that
because the statute is remedial in nature, its terms must be
construed in liberal fashion if the underlying Congressional
purpose is to be effectuated).
In this light, the "Wrong-Person Error" alleged by plaintiff
can be deemed to fall under paragraphs (1) and (2) of § 1666(b).
Under paragraph (1) of § 1666(b), a billing error includes "a
statement of credit which was not made to the obligor or, if
made, was not the amount reflected on such statement."
15 U.S.C. § 1666(b)(1). Under TILA, "credit" simply refers to a right that
a creditor grants a debtor to defer payments of debt, whereas an
"extension of credit" occurs when an individual opens or renews
an account that lets him do so. See American Express Co. v.
Koerner, 452 U.S. 233, 241, 101 S.Ct. 2281, 2286, 68 L.Ed.2d 803
(1981). Here, although it appears that Peter Belmont opened a
credit account and gained an "extension of credit" in 1987, he
contended in his May 13, 1998 letter to Associates that he was
not an obligor on the Associates account and, thus, implied that
Associates never extended credit to him in the amount stated on
the May 5, 1998 billing statement, viz., the entire amount of the
statement, $1,898.49.*fn6 Nothing in paragraph (1) indicates
that its scope is limited to particular charges to the account,
as opposed to the entire account itself. Thus, plaintiff's
"Wrong-Person Error" falls within the language of paragraph (1),
For similar reasons, plaintiff's "Wrong-Person Error" also
qualifies as a billing error under § 1666(b)(2). Peter Belmont's
May 13, 1998 letter clearly requested clarification, including
documentary evidence, regarding whether Associates had, in fact,
extended him the credit reflected on the May 5, 1998 statement,
viz., the entire balance of $1,898.49.
Whether, as argued by plaintiff, the "Wrong-Person Error" could
also qualify as a "computation error or similar error of an
accounting nature" under § 1666(b)(5) presents a more difficult
question of interpretation, which need not, and will not, be
addressed given that the error alleged by Belmont clearly falls
within the language of paragraphs (1) and (2), liberally
b. Sufficiency of Plaintiff's Notice of Billing Error
Associates argues in the alternative that even if Peter
Belmont's claims qualify as a billing error, it had no obligation
to respond to his letters because Belmont did not comply with the
notice requirements of § 1666.
TILA provides that notice of a billing error satisfies the
requirements of § 1666 when it is received by the creditor within
sixty days after the creditor has sent the obligor a statement of
his account and when in the notice, the obligor:
(1) sets forth or otherwise enables the creditor to
identify the name and account number (if any) of the
(2) indicates the obligor's belief that the statement
contains a billing error and the amount of such
billing error, and
(3) sets forth the reasons for the obligor's belief
(to the extent applicable) that the statement
contains a billing error.
15 U.S.C. § 1666(a).
Peter Belmont's May 13, 1998 "Notice of Billing Error" letter,
which Associates received on May 19, 1998 — well within the
sixty-day period following the May 5, 1998, statement — (1)
repeatedly stated his name and account number, and (2) indicated
the reason he believed a billing error occurred, as well as (3)
the amount of such error. See Gellhaus Aff., Ex. E. In point of
fact, after examining Peter Belmont's letter (which is couched
throughout in language mirroring that of § 1666), it is doubtful
that Associates has ever received a more perspicuous notice of
billing error or one that adheres more closely to the
requirements of § 1666.
Associates suggestion that plaintiff's letter was not
recognizable as, and is not, a valid notice of billing error —
despite the all-capitals heading on the first page which read
"NOTICE OF BELIEVED BILLING ERROR AND REQUEST FOR DOCUMENTARY
EVIDENCE OF CONSUMER INDEBTEDNESS" — appears to be simply a
transparent, post-hoc excuse for its tardy and incomplete
compliance with TILA. In this regard, it should be noted that
there is absolutely nothing in the correspondence between
Associates and Peter Belmont that suggests that defendant did not
recognize Peter Belmont's May 13, 1998 letter, or either of his
two, equally meticulous subsequent letters, for what they
manifestly were: notices of billing error under § 1666.
Nonetheless, Associates contends that the plaintiff's May 13,
1998 letter did not indicate that he was disputing a particular
charge or alleging a "particular billing error" and the amount of
such error. See Def.'s Reply Mem. Supp. Summ. J. at 3. However,
Peter Belmont's letter clearly indicates at several different
points that he believed the amount of the billing error to be
$1,895.49; indeed, the heading of the letter's second paragraph
reads "The amount for which I was billed, and which ENTIRE
AMOUNT I believe to be erroneously billed, as to me, is:
$1,895.49." Gellhaus Aff., Ex. E, ¶ 2 (emphasis in original).
Finally, Associates contends that Peter Belmont's Notice of
Billing error did not meet the requirements of § 1666(a) because
it was not timely filed. Defendant argues that if the
"Wrong-Person Error" is a billing error, the first statement that
showed such an error was the January 1993 statement,*fn7 which
Belmont's April 1992 letter asking to be removed as a co-obligor
on the account, but which still listed Peter Belmont as a holder
of the account. Thus, Associates argues, to comply with §
1666(a), Peter Belmont's notice should have been mailed within
sixty days of the January 1993 statement, not the May 1998
statement. See Def.'s Reply Mem. at 2-4. Associates's argument
rests on the assertion that although the first statement Peter
Belmont received was on May 5, 1998, he had constructive notice
of the contents of the prior statements mailed to his son. See
id. at 3.
Associates's argument overlooks the fact that Peter Belmont and
his son did not share the same address in January 1993 or at any
time thereafter; Peter Belmont's son was living in Massachusetts
or California, while Peter Belmont lived in New York.
Consequently, plaintiff would have no reason to know that his
name appeared on Associates's statements. Further, the promptness
of Peter Belmont's response once he actually received a statement
from Associates*fn8 belies the notion that he had any knowledge
that his name appeared on billing statements mailed to his son on
earlier dates. Nor can it be found that Peter Belmont should have
known that his name was on the statements sent to his son, for no
duty to exercise reasonable diligence that could apply in these
circumstances would require him to examine his son's mail — which
was sent to addresses at which Peter Belmont never resided — in
order to ascertain whether he was still listed as an addressee on
billing statements pertaining to charges made by his son.
Accordingly, even assuming that the statute allows for
constructive notice, Peter Belmont did not have constructive
notice of the contents of the pre-May 1998 statements, and his
May 13, 1998 Notice of Billing error was, therefore, timely sent
to Associates. In sum, then, plaintiff complied fully with his
obligations under § 1666.
The same, however, cannot be said of Associates. Once a
creditor is on notice of a believed billing error, the Act
(A) not later than thirty days after the receipt
of the notice, [the creditor must] send a written
acknowledgment thereof to the obligor, unless the
action required in subparagraph (B) is taken within
such thirty-day period, and
(B) not later than two complete billing cycles of
the creditor (in no event later than ninety days)
after the receipt of the notice and prior to taking
any action to collect the amount, or any part
thereof, indicated by the obligor under paragraph (2)
(i) make appropriate corrections in the account
of the obligor, including the crediting of any
finance charges on amounts erroneously billed, and
transmit to the obligor a notification of such
corrections and the creditor's explanation of any
change in the amount indicated by the obligor . . .
and, if any such change is made and the obligor so
requests, copies of documentary evidence of the
obligor's indebtedness; or
(ii) send a written explanation or clarification
to the obligor, after having conducted an
investigation, setting forth to the extent
applicable the reasons why the creditor believes
the account of the obligor was correctly shown in
the statement and, upon request of the obligor,
provide copies of documentary evidence of the
15 U.S.C. § 1666(a)(3) (emphasis added).
In this case, Associates received Peter Belmont's first Notice
of Billing Error
on May 19, 1998, see Pl.'s Decl. Opp'n, Ex. 2 (return receipt
card), but did not send any correspondence to Peter Belmont
regarding the notice until July 20, 1998 — sixty-two days later.
Associates's July 20, 1998 correspondence to Belmont consisted of
two letters, the first of which appears to be a form response
letter, while the second more directly responds to his notice(s)
of billing error.*fn9 See Gellhaus Aff., Exs. F, G. On its
face, defendant's response violates § 1666(a)(3)(A), which
requires a creditor to acknowledge the receipt of a notice of
billing error within thirty days.
In its defense, Associates contends: "Both letters were mailed
to the plaintiff within . . . [the] two complete billing cycle
period allowed by 15 U.S.C. § 1666(a)(B) [sic]. Indeed, at least
one was mailed within the 30 days required by
15 U.S.C. § 1666(a)(A) [sic]." Def.'s Mem. at 4. However, Associates's
argument is again based on an untenable interpretation of the
statute. Although it is true that Associates's July 20th
correspondence came within two complete billing cycles of the May
5, 1998 statement, § 1666(a)(3)(B) states a requirement in
addition to, not in lieu of, § 1666(a)(3)(A), which sets forth
the 30-day written acknowledgment requirement.
Finally, Associates's defense that at least one letter was sent
within the thirty-day period of § 1666(a)(3)(A) appears to be
based on the fact that Associates's July 20th letters were sent
within thirty days of Belmont's second Notice of Billing Error.
However, the fact that Associates's response would have been
timely as to Peter Belmont's second letter, does not excuse
Associates for not responding to his initial notice until
sixty-two days after it was received.
Moreover, even if the July 20th letters had been preceded by a
timely acknowledgment of receipt of Peter Belmont's May 13th
notice, they still would not have complied with § 1666(a)(3)(B).
Section 1666(a)(3)(B) is not satisfied simply by showing that the
creditor sent any response at all to the notice of billing error;
rather, it requires that the creditor either (1) make the
appropriate corrections to the account, thereby remedying the
billing error, or (2) send a written explanation or
clarification, including copies of any documentary evidence
requested. See 15 U.S.C. § 1666(a)(3)(B). Associate's July 20th
correspondence did neither.
On this point, Associates contends that "one of the [response]
letters . . . provides a written explanation as to why defendant
Associates believes the plaintiff was liable for the undisputed
charges on the account. This is all that is required by
15 U.S.C. § 1666(a)(B)(ii) [sic]." On the contrary, what is required by §
1666(a)(3)(B)(ii) in this case is that "copies of documentary
evidence of the obligor's indebtedness" be provided in accord
with plaintiff's request. 15 U.S.C. § 1666(a)(3)(B)(ii). No such
documentation was provided with the July 20th letters, and while
it may be that the pertinent documentary evidence rested with
Boatmen's or some other prior holder of the account, even that
would not release Associates of its statutory obligation.
Therefore, Associates did not comply with the "procedure upon
receipt of notice [of billing error] by creditor" prescribed by §
Nonetheless, Associates argues that even if their response
letters were not sufficient for timely compliance with § 1666, it
still has established a good faith defense under
15 U.S.C. § 1640(f). See Def.'s Mem. at 4. Section 1640(f) states that no
liability under the Act shall apply "to any act done or omitted
in good faith in conformity with any rule, regulation, or
interpretation thereof by the [Federal Reserve] Board."
15 U.S.C. § 1640(f); see
Turner v. General Motors Acceptance Corp., 180 F.3d 451, 455
(2d Cir. 1999); Kessler v. Associates Financial Servs. Co.,
573 F.2d 577, 579 (9th Cir. 1977); Pennino v. Morris Kirschman &
Co., 526 F.2d 367, 370 (5th Cir. 1976). However, nowhere does
Associates assert that it mistakenly relied on any rule,
regulation or interpretation of the Federal Reserve Board in
fashioning its response to plaintiff's Notice of Billing Error.
Accordingly, Associates's argument under § 1640(f) has no merit.
Because Associates manifestly did not comply with the 30-day
written acknowledgment requirement of § 1666(a)(3)(A) and because
it has not established its entitlement to a good faith defense
under § 1640(f), its actions in failing to respond to Peter
Belmont's May 13, 1998 letter until July 20, 1998, constitute a
violation of § 1666(a)(3).
Peter Belmont also claims that Associates violated
15 U.S.C. § 1666a(a) and 12 C.F.R. § 226.13(d)(2) when it made or threatened
to make an adverse credit report while his Notice of Billing
Error remained unresolved. See Am. Compl. ¶ 17. Section 1666a
provides that after a creditor receives a notice of billing error
from an obligor under § 1666(a):
[A] creditor or his agent may not directly or
indirectly threaten to report to any person adversely
on the obligor's credit rating or credit standing
because of the obligor's failure to pay the amount
indicated by the obligor . . . and such amount may
not be reported as delinquent to any third party
until the creditor has met the requirements of
section 1666. . . .
15 U.S.C. § 1666a(a); see also 12 C.F.R. § 226.13(d)(2)
(paraphrasing § 1666a(a)).