Smith v. Cash Store Management, Inc.

The Cash Store Management, Inc. (Cash) (defendant) loaned money to consumers for two-week periods. All of these loans had annual percentage rates of greater than 500 percent, and consumers were required to write checks postdated to the end of the loan period for the full amount they were required to pay. At the end of a two-week term, a consumer would have the option of continuing the loan for an additional two weeks by paying the interest that was due. Valerie Smith (plaintiff) obtained eight two-week loans from Cash with annual interest rates of 521 percent. Each time Smith obtained a loan from Cash, she wrote the required postdated check and signed a standard consumer-loan agreement, which stated that the postdated check was security for the loan. Every time Smith obtained a new loan or renewed an existing loan, Cash stapled a receipt to the top of the loan agreement that labeled the finance charge as a “deferred deposit extension fee” or a “deferred deposit check fee,” based on the specific circumstance. Smith filed suit against Cash, alleging that Cash had violated provisions of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq. The district court dismissed Smith’s complaint for failure to state a claim upon which relief could be granted. Smith appealed, contending that Cash had violated TILA by using its receipts to obscure disclosures, using misleading terms in its receipts, and asserting that the postdated check was security for the loan.