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Household Credit Services v. Pfenning

United States Supreme Court
541 U.S. 232 (2004)


Facts

Sharon Pfenning (plaintiff) was the holder of a credit card issued by Household Credit Services, Inc. (Household) (defendant). Pfenning had a credit limit on her credit card of $2,000. However, Pfenning was able to exceed the $2,000 cap, subject to a $29 over-limit fee for each month she surpassed the allowable limit. Household billed Pfenning according to a regular billing cycle. When Pfenning exceeded the $2,000 limit during a specific billing cycle, Household added the $29 over-limit fee to her billing statement. However, Household did not list the over-limit fee as a finance charge. Pfenning sued Household in district court, alleging that by failing to include the over-limit fee as a finance charge, Household was misrepresenting the true cost of the credit in violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq. Household moved to dismiss the complaint, arguing that fees for exceeding a credit limit were specifically excluded from the definition of finance charges by the Federal Reserve Board (Board) in Regulation Z, 12 C.F.R. § 226.4(c)(2). The district court agreed with Household’s argument and granted the motion to dismiss. Pfenning appealed, and the court of appeals reversed. The United States Supreme Court granted certiorari.

Rule of Law

Issue

Holding and Reasoning (Thomas, J.)

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