2022 QCCQ 6769, 2022 QCCQ 6769

Lipari c. Capital One Card Services 2022 QCCQ 6769 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL Civil Division N° : 500-32-711478-208 DATE : October 13, 2022 ______________________________________________________________________ BY THE HONOURABLE MAGALI LEWIS J.C.Q. ______________________________________________________________________ MARK LIPARI PLAINTIFF c.

CAPITAL ONE CARD SERVICES DEFENDANT ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Alleging that Capital One Card Services (Capital One) has refused to reverse charges that were made fraudulently on his credit card, Mark Lipari is claiming $13,332.74 from the credit card company. [ 2 ] Capital One contests the application alleging that it is not receivable under the contract that binds the parties. I.

THE QUESTIONS AT ISSUE : [ 3 ] To decide the present case, the Court will answer the following questions: 1. Did Capital One have to credit the amount charged to Mr. Lipari’s account based on his assertion that the products he ordered on Amazon were not delivered? 2. Did Capital One have to credit Mr. Lipari’s account with the amount of $1,377.19 charged on his credit card for a purchase made through a fraudulent use of his PayPal account made on May 19, 2019? 3. Is Mr. Lipari entitled to the amounts he claims? II. THE CONTEXT [ 4 ] Mr.

Lipari’s claim is detailed as follows: - $1,149.60: the amount charged on his credit card for a purchase made on Amazon.ca (Amazon) on the grounds that the merchandise was not delivered or stolen before he took possession of it; - $1,377.19: the amount charged on his Capital One account through a fraudulent use of his PayPal account; - $10,000.00: for punitive damages. The Amazon transaction [ 5 ] On March 17, 2019, using his Capital One card, Mr. Lipari purchased on Amazon 10 sets of Nadair 6 pack 4’’ Ic Rated LED Dimmable Ultra Slim Recessed Panel Light with Junction Box.

The purchase was charged to his credit card the next day, on March 18, 2019, for a total of $1,149.60 (P-2). [ 6 ] On April 9, 2019, Mr. Lipari contacted Capital One to dispute the amount on the grounds that he had not received the merchandise, asking for the transaction to be reversed. [ 7 ] On April 18, 2019, Mr. Lipari’s account was credited of the amount charged in relation to said purchase, pending Capital One’s investigation. [ 8 ] On April 30, 2019, Capital One sent a letter to Mr.

Lipari to inform him that the amount would be rebilled on his credit card, because he had not provided the requested supporting documentation in connection with the disputed amount (D-5). [ 9 ] Mr. Lipari sent additional information to Capital One on May 7, 2019, including a police report for the alleged theft of the

merchandise and a handwritten note from him indicating that he had been told on each of the eight occasions that he contacted Amazon between March 23 and April 6, 2019, that the amount of the undelivered purchase would be credited to him (P-1). [ 10 ] Following receipt of that information, Capital One again credited Mr.

Lipari’s account of the amount on May 13, 2019, and sent him a letter (D-6) to confirm that it considered the case closed, under reserve that the merchant resubmit the charge within the next 45 days, in which case the amount could be re-billed. [ 11 ] In a letter dated June 21, 2019, Amazon provided Capital One with proof that on March 19, 2019, Canada Post delivered the merchandise for the purchase of which Mr. Lipari’s Capital One account had been credited (D-7). [ 12 ] On July 2, 2019, the amount was thus re-billed to Mr. Lipari’s Capital One credit card (D-8). [ 13 ] When Mr.

Lipari contacted Capital One’s fraud department on July 3, 2019, about this matter, he was informed that the merchant having provided proof of delivery of the ordered merchandise, the complaint he had made to the police was insufficient for the dispute department. He was also advised to contact Canada Post and/or the merchant to dispute the delivery (D-6). The PayPal Transaction [ 14 ] On May 19, 2019, a transaction of $1,377.19 was made through Mr. Lipari’s PayPal account, credited on his Capital One account (D-3). [ 15 ] On July 23, 2019, Mr.

Lipari called Capital One’s fraud department to dispute the charge, stating that he had no idea what the charge was for (D-6). [ 16 ] On August 13, 2019, Mr. Lipari’s account was credited of the amount, pending Capital One’s investigation (D-3). [ 17 ] During its investigation of Mr. Lipari’s claim, Capital One received information that the transaction was made using his authorized legitimate PayPal account, and that after contacting PayPal he was promised a refund because the transaction was made when PayPal had been hacked. [ 18 ] On the basis of that information, on August 15, 2019, Capital One informed Mr.

Lipari that it could not process his claim as a fraud case, but rather as a dispute. [ 19 ] The amount was charged back to Mr. Lipari’s Capital One credit card account on August 27, 2019. Although Mr. Lipari had agreed to start a dispute process with Capital One after he was explained that the amount would be charged back (D-8), he never did start the dispute process. Capital One’s position [ 20 ] Capital One explained that in entering into a credit agreement and by using the Credit Card it issued to Mr.

Lipari, the latter accepted the terms of the Cardholder Agreement (D-2). [ 21 ] The agreement provides that in case of a dispute, if the cardholder has problems, he must pay the amount owing on his account, settle the problem directly with the merchant and may not stop payment on any transaction. [ 22 ] The Cardholder Agreement also provides in the case of unauthorized use of the Credit Card, if Capital One’s investigation establishes that there was no unauthorized use, the cardholder is fully liable for all amounts charged to the account (D-2, p. 10). [ 23 ] Since the amounts for which Mr.

Lipari is claiming reimbursement were both authorized charges, Capital One takes the position that those charges do not constitute fraud within the Cardholder Agreement. Mr. Lipari thus had the obligation under the agreement, to pay the amounts owing and settle the disputes with the merchants. Consequently, Capital One contends that Mr.

Lipari is responsible for any damages he may have sustained for having failed to pay the capital or the interests owed in accordance with the Cardholder Agreement. [ 24 ] As for the amount claimed as compensatory and punitive damages in the amount of $10,000, Capital One takes the position that it is grossly exaggerated and unsupported by evidence.

III.THE ANALYSIS [ 25 ] Anyone who wants to assert a right shall prove the facts that sustain his claim with clear and convincing evidence that makes the existence of the facts he wishes to establish more probable than their nonexistence [1] , to satisfy the test of balance of probabilities. [ 26 ] The evidence does not have to lead to an absolute certainty, scientific or mathematical.

It is sufficient that it makes probable the disputed facts [2] . [ 27 ] If the evidence is not compelling enough, or if it is contradictory and the judge is unable to determine where the truth lies, the party which has failed to establish the facts at the origin of his or her claim will lose, in whole or in part [3] . 1. Did Capital One have to credit the amount charged to Mr. Lipari’s account based on his assertion that the products he ordered on Amazon were not delivered?

[ 28 ] Considering the terms of the contract binding the parties, the Court answers the question by the negative. [ 29 ] The Card Holder Agreement (D-2) provides the following: When you or an authorized user accesses the account for the first time, including any purchases made at the time of application, you accept the terms of this agreement and request cards, including renewal and replacement cards. […] If you have problems with anything you buy using your card or account number, you must pay the amount owing on your account and settle the problem directly with the merchant .

You may not stop payment on any transaction. In some circumstances, we may be able to provide assistance in resolving disputed transactions. If you wish to discuss a dispute, you may contact us at 1-800-723-3500. You must contact us within 30 days of receiving statement. If a merchant gives you a refund and we receive a credit note from the merchant, we’ll credit it to the account on the day we receive it . […] Lost/stolen cards & unauthorized use of your account. […] You must contact us by telephone immediately […] if a person uses your account without your permission (known as “unauthorized use”).

You have no liability to pay for any transaction entered into through unauthorized use of your account. [ 30 ] The Cardholder Agreement is clear, Mr. Lipari had to settle the delivery issue with Amazon. [ 31 ] Capital One did not contract with Amazon. It executed the payment Mr. Lipari asked Capital One to make to Amazon in consideration of the purchase he made. If the merchandise was not delivered, to obtain a credit from Capital One, Mr. Lipari had to obtain a confirmation from Amazon that it would reimburse Capital One. [ 32 ] Capital One is not liable to compensate Mr.

Lipari for Amazon’s failure to respect its contractual obligations. 2. Did Capital One have to credit Mr. Lipari’s account with the amount of $1,377.19 charged on his credit card for a purchase made through a fraudulent use of his PayPal account made on May 19, 2019? [ 33 ] For the reasons set forth below, the Court answers the question by the negative. [ 34 ] Capital One was informed by PayPal that the May 19, 2019, transaction was carried out by people that had hacked its system and managed to use Mr. Lipari's PayPal account fraudulently. [ 35 ] Mr.

Lipari should thus claim and obtain to be reimbursed by PayPal. Capital One is not a client of PayPal and did not use Mr. Lipari’s PayPal account. It just paid what seems on its hand to be an authorised transaction made using his PayPal account which is linked to his Capital One credit card account. [ 36 ] Mr. Lipari’s problem in regards to the contested charge takes its source from PayPal’s failure to ascertain the security of its clients’ identity. In those circumstances, Capital One does not have to credit Mr.

Lipari for the fraudulent transaction that was made because the PayPal platform was hacked, and then dispute PayPal’s obligation to compensate its client (Mr. Lipari) for a breach of security on its platform. 3. Is Mr. Lipari’s entitled to the amounts he claims? [ 37 ] The Court answers this question in the negative, given the answers to the previous questions. Legal fees [ 38 ]

Article 340 of the Code of Civil Procedure provides that the losing party is entitled to legal costs. WHEREFORE, THE COURT: [ 39 ] REJECTS the claim; [ 40 ] CONDEMNS Mark Lipari to pay $ 313 to Capital One Card Services as judicial costs. __________________________________ MAGALI LEWIS, J.C.Q. Date of hearing : July 13, 2022