16a-3-403.   (UCCC) Credit card issuer subject to defenses.(1) If the issuer of a credit card, other than a lender credit card, isthe seller or lessor or a person related to the seller or lessor, or ifthe seller or lessor is licensed, franchised, or permitted by the issuerto do business under the business name or trade name or designation ofthe issuer, the issuer is subject to all claims and defenses of a buyeror lessee against the seller or lessor arising out of a sale or lease ofgoods or services pursuant to the credit card.

      (2)   The issuer of a lender credit card is not subject to the claimsand defenses of a buyer or lessee arising out of a sale or lease ofgoods or services pursuant to a lender credit card except where a homesolicitation sale is involved. For purposes of this section, a "homesolicitation sale" means a sale to a consumer of goods (other thanequipment used in a business) orservices, in which the seller or a person acting for the sellerengages in a personal solicitation (other than by telephone or mail) of the sale at aresidence of the buyer. It does not include a sale made pursuant toprior negotiations between the parties at a business establishment at afixed location where goods or services are offered or exhibited forsale.

      (3)   Claims or defenses of a buyer or lessee against a seller orlessor in connection with a home solicitation sale may be assertedagainst the issuer of the lender credit card only:

      (a)   If the buyer or lessee has attempted in good faith to obtainreasonable satisfaction from the seller or lessor with respect to claimsor defenses, and

      (b)   to the extent of the amount owing to the issuer with respect tothe sale or lease at the time the issuer has notice of the claims ordefenses. Notice of the claims or defenses may be given prior to theattempt specified in paragraph (a). The notice, which may generallystate the claims or defenses, must be in writing but may be sent toeither the seller (or lessor), or to the issuer.

      (4)   For the purpose of determining the amount owing to the issuerwith respect to a sale or lease under a credit card, payments receivedupon the account are deemed to have been first applied to the payment offinance charges in the order of their entry to the account and then tothe payment of debts in the order in which the entries of the debts aremade to the account.

      (5)   An agreement may not provide for greater rights for an issuer ofa credit card than this section permits.

      History:   L. 1973, ch. 85, § 58; L. 1981, ch. 93, § 12; July 1.