In White v. Chase Bank USA, N.A., 2017 WL 1131898, at *2–6 (E.D.N.C., 2017), Judge Britt held that an FCBA claim could proceed past the pleadings stage but an EFTA claim could not. The Plaintiff adequately pleaded an FCBA claim.
Plaintiff first alleges that Chase violated the billing dispute procedures contained in the FCBA because it failed to conduct a reasonable investigation of the alleged billing errors and correct the billing errors as required by 15 U.S.C. § 1666. (Am. Compl., DE # 8, ¶¶ 68-69.) . . .“To succeed on a claim under § 1666, plaintiff must show (1) the existence of a billing error, (2) timely notification of the billing error, and (3) failure of the bank issuing the card to comply with the procedural requirements of Section 1666.” Cunningham v. Bank One, 487 F. Supp. 2d 1189, 1191-92 (W.D. Wash. 2007) (citation omitted). . . .Plaintiff also alleges a violation of the FCBA based on Chase’s refusal to grant her request for a refund of the credit balance shown on her May 2015 statement. (Am. Compl., DE # 8, ¶ 70.) . . .Here, Chase does not dispute that the May 2015 credit card statement reflects that plaintiff’s account had a credit balance in the amount of $59,403.39. (See Def.’s Mem. in Support, DE # 15, at 8.) Instead, Chase appears to argue that the credit balance shown on the May 2015 statement was inaccurate because it reflected credits that were mistakenly applied to plaintiff’s account following its internal investigation. Chase therefore contends that it did not violate § 1666d because “none of the generalized factual allegations in the [a]mended [c]omplaint demonstrate that [plaintiff] was actually entitled to the credit and refund of the credit balance shown on the May 2015 statement.” (Id. at 8.) Chase does not refer to any attached materials from which the court could determine whether or not the credits at issue were warranted. Therefore, accepting plaintiff’s allegations that she was “owed” the credits and requested a refund of the credit balance as true, plaintiff has plead sufficient facts to support a claim under § 1666d. Plaintiff’s third FCBA claim alleges that Chase “wrongfully and without authorization applied funds held on deposit by Chase for plaintiff to the unauthorized charges.” (Am. Compl., DE # 8, ¶ 71.) . . ,.Chase argues that plaintiff cannot state a claim pursuant to § 1666h because the allegations in her amended complaint do not sufficiently demonstrate that Chase ever properly held funds on deposit for plaintiff or that it misapplied any such funds. (Def.’s Mem. in Support, DE # 15, at 8.) Chase once again bases its argument on its assertion that the credits giving rise to the credit balance on the May 2015 statement were mistakenly issued. As noted above, at this stage of this case it cannot be determined whether or not Chase actually owed plaintiff the credit balance shown on the May 2015 statement. Taking plaintiff’s allegation that she was entitled to the credit balance as true, the FCBA permitted Chase to use the credit balance to offset new account charges only in the limited circumstance where plaintiff agreed to the offset. Given plaintiff’s allegation that she repeatedly requested a refund of the credit balance, the amended complaint supports an inference that Chase did not have plaintiff’s consent to use the credit balance to pay off amounts due on the credit card. Therefore, the court finds that plaintiff has asserted a plausible claim under § 1666h.
The District Court also said that the Plaintiff failed to state an EFTA claim because credit card transactions — even if through PayPal — were exempt.
Plaintiff also claims that Chase violated various provisions of the EFTA by failing to follow the proper procedure for resolving errors associated with electronic fund transfers. (Am. Compl., DE # 8, ¶¶ 73-77.) Chase argues that this claim should be dismissed because the EFTA excludes credit card transactions from its coverage. (Def.’s Mem. in Support, DE # 15, at 8.) “Importantly, because the EFTA deals with electronic funds transferred directly from bank accounts, it applies to debit cards, but not credit cards.” Walker v. JPMorgan Chase Bank, N.A., No. 13:2100-JDT-dkv, 2013 WL 2151713, at *5 (W.D. Tenn. May 16, 2013) (citations omitted); see also Sanford v. MemberWorks, Inc., 625 F.3d 550, 560 (9th Cir. 2010) (noting the EFTA does not apply to credit based transactions). Plaintiff argues that the implementing regulation for the EFTA, Regulation E, 12 C.F.R. § 1005.12, extends the EFTA’s coverage to transactions involving both credit and electronic fund transfer aspects. (Pl.’s Resp. in Opp’n, DE # 17, at 5-6.) She insists that the challenged credit card transactions fall within the protection of the EFTA because it appears they were initiated electronically via PayPal or a similarly modeled transaction. (Id.) Plaintiff is correct that Regulation E covers “[t]he addition to an accepted credit card …, of the capability to initiate electronic fund transfers [.]” 12 C.F.R. § 1005.12(a)(1)(i). However, regardless of the capabilities of a credit card, coverage under the EFTA depends on the nature of the challenged transaction. See id. § 1026.12(g) (stating that Regulation Z, the implementing regulation for the FCBA, “applies to the credit aspects of combined credit/electronic fund transfer transactions”). “If the unauthorized use of a combined access device-credit card solely involves an extension of credit … and does not involve an EFT, for example, when the card is used to draw cash advances directly from a credit line, only the error resolution provisions of Regulation Z will apply.” Id. § 1005.6. Thus, in order for the challenged transactions to fall within the EFTA’s coverage, plaintiff must show that the electronic fund transfers involved a credit or debit to a consumer account. See Walker, 2013 WL 2151713, at *5 (“Electronic fund transfers covered by the Act have three components: 1) a transfer of funds, 2) initiation by electronic means, and 3) a debit or credit to a consumer account.”). Here, plaintiff alleges that the challenged transactions involved unauthorized charges to her credit card account. Thus, even assuming the unauthorized charges were initiated via PayPal, the challenged transactions were credit based transactions and did not involve an electronic funds transfer within the meaning of the EFTA. Accordingly, the court finds that the EFTA is inapplicable to the challenged transactions and plaintiff’s EFTA claim must be dismissed.