Gray v. American Express Co.

Oscar Gray (plaintiff) had a credit card issued by American Express (defendant). The cardholder agreement between Gray and American Express provided that American Express had the right to cancel Gray’s card at any time and for any reason. In 1981 Gray used his credit card to purchase airline tickets, and American Express agreed to let Gray pay for the tickets in monthly installments over a year. American Express erroneously included the deferred installment payments on Gray’s March 1981 credit card bill as current charges. Gray wrote a letter to American Express on April 22, 1981, explaining the erroneous charges. After American Express failed to investigate the charges, Gray wrote another letter in September. Gray did not pay the disputed amount. In 1982 American Express turned Gray’s account over to a debt-collection agency and canceled his credit card. Gray filed a lawsuit against American Express in federal district court, alleging that American Express had violated the Fair Credit Billing Act (FCBA) by canceling his account while he was disputing the erroneous charges. American Express argued that under the cardholder agreement, it was allowed to cancel Gray’s account at any time and for any reason. The district court granted summary judgment for American Express, holding that Gray failed to fulfill the procedural requirements of the FCBA. The FCBA prohibited a credit card issuer from canceling a card if a consumer failed to pay a disputed bill. To trigger the FCBA’s protections, a consumer had to notify the credit card issuer of the billing dispute within 60 days of receiving his bill. The district court ignored Gray’s April 1981 letter and found that Gray’s September 1981 letter was sent more than 60 days after Gray received his March 1981 bill. Gray appealed.