Jim Sues His Credit Card Company

February 2004

I never thought I'd be suing someone, but my credit card company gave me no choice.

For no apparent reason they made a slight change in my address. Since it was a credit card I rarely used, I didn't notice when no statement came.

Then one day I got a call from a collection agency--a call that came as a shock. I've always paid my bills on time. The lady on the phone demanded I pay on the spot, so I did, using a different credit card. Big mistake.

I tried calling my credit card company to see if I could get a statement. I wanted to know how much the original charge was and determine whether it was fraudulent. No cooperation. They simply said anything to get me off the phone.

I forgot about it. But months later when I applied for a credit card, I was turned down.

So what did I do? I wrote about it in this column, as some of you may remember.

A friend read my column and took pity on my situation. Although he wasn't a lawyer, he said he could help me out. He knew a bit about consumer law and had a powerful tool to draw upon: the Internet. He promised to get the money back and to get my credit rating fixed.

He first tried to call my credit card company, but with no more success than I'd had.

Time to resort to the law. Fortunately, Congress has passed some laws that are very friendly to consumers, laws that are clearly explained on the Federal Trade Commission web site.

According to the site, my credit card company was in violation of the Fair Credit Billing Act. They violated the law by not sending me a statement, by sending the account to collection, and by collecting the money.

The web site explains that the next step is to send a certified letter. My friend wrote the letter, often referred to as a "demand letter," explaining what happened and citing their violations of the law. We asked that they return the money and fix my credit rating--and told them we'd resort to legal action if they didn't respond. I signed the letter and off it went.

The Fair Credit Billing Act requires that they acknowledge receiving the letter within 30 days and resolve the dispute within 90 days of receiving the letter. They ignored the letter.

So now they had five violations of the law. Small Claims Court here we come. Again my friend did the paperwork and I signed off.

The very helpful FTC site not only presented information about the law, but also gave an indication of how much I could sue them for. It specifies that one can ask for damages to one's credit rating as well as double the unwarranted interest and penalties, plus attorney fees and costs.

So then what happened? I got a call from my credit card company wanting to settle. I felt empowered.

They were very nice. They offered to clear up my credit rating immediately and agreed to the amount I asked for.

However, when the court date came around, we still hadn't finalized the settlement agreement. They said that I should just go in and dismiss the suit with prejudice and that we'd finalize the agreement in the coming days.

"Dismiss with prejudice"? What did that mean? To look up a definition in Google, you type "define:" (without the quotation marks) and then a space and then your term.

When I typed in "define: dismiss with prejudice," Google found this definition: "To dismiss the present action, and deny the right to file another suit on that claim."

Didn't sound like that was what I wanted to do, since we didn't yet have an agreement. So I called the courthouse, and the clerk explained that I could simply ask for a continuance.

Now everything is settled, and I'm left with the feeling that the system worked. Justice was served. And that the Internet can help in a big way.

There are many online resources related to consumer protections. The American Loan Search web site has an excellent section on Credit Repair that tells you everything you need to know to clear up your credit rating. It gives detailed information on the Fair Credit Reporting Act, which specifies your rights relative the to the credit bureaus. See also the Electronic Privacy Information Center.

In December President Bush signed the Fair and Accurate Credit Transactions Act, which entitles you to free annual credit reports, thereby helping you avoid identity theft. You can get your free credit report at AnnualCreditReport.com.

© 2004 by Jim Karpen, Ph.D