Opinion ID: 1860828
Heading Depth: 2
Heading Rank: 1

Heading: Systems of Billing

Text: The purchase of goods or services with a BankAmericard is a three-party transaction. The customer using the card receives the purchased items from a merchant. The merchant then sells the account receivable generated by the purchase to the defendant at a discount. The defendant then bills the cardholder for the full amount of the debt. In this case the cardholder's first contract with BankAmericard provided for a finance charge of 1.5 percent per month (18 percent annually) on the unpaid balance. The subsequent contract was for .0493 percent per day. Because the number of cardholders is very large, it is not economically feasible to bill them all on the same day. Therefore, the defendant divides the cardholders into smaller, more manageable groups and bills each group on a different day of the month. For example, group one might be billed on the first day of every month, group two on the second, etc. This day is called the billing date. If the billing date for a particular group happens to fall on a Sunday or a holiday in a given month, the group is billed on the immediately preceding work day. The billing date for each group is the last day of that group's billing cycle. The number of days in a group's billing cycle will vary depending on the billing date, the number of days in the month or months spanned by the billing cycle and whether the billing date falls on a Sunday or a holiday. During the time period pertinent to this appeal, the defendant's BankAmericard holders were divided into 20 separate billing groups. From June to October of 1969, the defendant did not impose a finance charge on purchases made with a BankAmericard if the cardholder paid for the purchases in full within 25 days of the cardholder's billing date. Thus, for example, if a cardholder purchased $200 of goods or services in June, had a billing date of July 1 and paid the defendant $200 by July 26, no finance charge would be imposed. If, however, the purchases were not paid for in full within 25 days, the defendant would impose a finance charge. The finance charge was calculated by multiplying the amount not paid by 1.5 percent. Thus, in the above example, if the cardholder only paid $40 by July 26, the August 1 bill would include: (1) the $160 in principal still owed for the June purchases, and (2) a finance charge of $2.40 (1.5% X $160). If the cardholder had purchased another $100 of goods or services during July, this would also be included in the August 1 bill but without any finance charge. If the cardholder paid the total amount of the August 1 bill by August 26, no further finance charge would be imposed. If the full amount was not paid, another finance charge would be imposed on the amount remaining unpaid. It was possible that the amount remaining unpaid upon which a finance charge would be imposed could include all or part of the previous month's finance charge. However, because the defendant applied partial payments first to unpaid finance charges and then to principal, a cardholder would not have a finance charge imposed on the previous month's finance charge unless the amount paid by the cardholder on the current bill was less than the amount owed for previous finance charges. In the example above, the cardholder would not have a finance charge imposed on the previous finance charge unless the cardholder paid less than $2.40 on the August 1 bill. In October of 1969 the defendant modified its method of computing finance charges. If a bill was not paid in full within 25 days of the billing date, the defendant would compute the finance charge by multiplying the sum of the actual daily balances in the cardholder's account during the billing cycle by.0493 percent. In a 28-day billing cycle, a .0493 percent daily rate amounted to a cyclical rate of 1.3804 percent (.0493% X 28). In a 29-day billing cycle, it amounted to a 1.4297 percent cyclical rate. In a 30-day billing cycle, it amounted to a 1.4790 percent cyclical rate. In a 31-day billing cycle, it amounted to a 1.5283 percent cyclical rate. On a yearly basis, it amounted to a rate of 17.9945 percent.