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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.

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Holding and Reasoning (Thomas, J.)

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