Koller v. West Bay Acquisitions, LLC, 2012 WL 2862440 (N.D.Cal. 2012), the District Court held:
Plaintiff maintains that because he allegedly acquired extended video rentals and/or the videos themselves without paying for them with late fees or product charges, the Rosenthal Act is applicable. Opp’n at 13. Because there is no binding authority as to whether late fees on video rentals constitute a “credit transaction,” the Court looks to authority on dishonored checks, as the situations are comparable. Like a dishonored check, penalties and late fees arise after what both parties thought was a completed transaction in which something had been purchased. ¶ Defendants rely on Abels v. JBC Legal Group, 428 F.Supp.2d 1023, 1026 (N.D.Cal.2005), in which a court in this district recently inferred from a Ninth Circuit decision that a dishonored check does not give rise to a “credit transaction.” The court stated that “implicit in Charles is a holding that a ‘credit requirement’ would exclude a dishonored check from the scope of the federal FDCPA.” Id. In Charles v. Lundgren & Assocs., 119 F.3d 739, 742 (9th Cir.1997), the Ninth Circuit held that the district court improperly “graft[ed]” a credit requirement to the federal FDCPA. Id. The Ninth Circuit held that because the FDCPA’s application is not limited to collection of debts arising out of the offer or extension of credit, the federal FDCPA applies to dishonored checks. Id. The court in Abels thus inferred that because the Rosenthal Act contains a credit requirement, it cannot apply to dishonored checks. Abels, 428 F.Supp.2d at 1026. ¶ However, there is conflicting authority as to whether dishonored checks constitute a “consumer credit transaction.” In a more recent Ninth Circuit bankruptcy case, although not discussing a FDCPA claim, the court directly addressed the linkage between a dishonored check and a credit transaction. The court held that other circuits have found that a creditor’s acceptance of what turns out to be a dishonored check transforms what would have been a contemporaneous exchange into a credit transaction, and the court explicitly joined those circuits. In re JWJ Contracting Co., Inc., 371 F.3d 1979, 1081 (9th Cir.2004). Additionally, Greenway v. Information Dynamics, Ltd., 524 F.2d 1145, 1146 (9th Cir.1975) supports the idea that dishonored checks are credit transactions by stating that “a check is essentially an extension of credit.” ¶ The Court finds that the late fees and/or penalties at issue here involve a “credit transaction,” under the Rosenthal Act. Although Plaintiff paid for the video at the time of rental, he allegedly acquired the video for a longer period of time than he paid for, and owes money for that time period. Thus he was allegedly in possession of property for which he had not paid, suggesting that the video was acquired and or retained on credit. See Gouskos v. Aptos Vill. Garage, 94 Cal.App.4th 754, 759, 114 Cal.Rptr.2d 558 (2001) (holding that a “consumer credit transaction” must be a “transaction when the consumer acquires something without paying for it”). Because the Court finds that there was a credit transaction, the Rosenthal Act is applicable.