Household Credit Services v. Pfennig
When Pfennig attempted to make a purchase using a credit card issued by Household Credit Services, the company allowed her to increase her credit limit. She was then assessed an over-limit charge of $29.00, which was listed on her monthly statement as a new purchase or debit rather than included as part of the finance charge. Pfennig alleged that the company's failure to disclose the fee as a finance charge violated the Truth in Lending Act (TILA). However, the Federal Reserve Board (FRB) has issued a regulation that expressly excludes fees charged for exceeding a credit limit from the definition of a finance charge under TILA. The district court dismissed Pfennig’s complaint as barred by the FRB's regulation. The court of appeals reversed, finding that the over-limit charge in this case fell within TILA's definition of a finance charge. Therefore, the court held the FRB's regulation invalid as applied for conflicting with the language and purpose of TILA. However, the company was held immune from liability for monetary damages because it acted in good faith in excluding the over-limit charge in conformity with a FRB regulation.
Question Presented:
Whether the FRB reasonably classified a fee imposed by a credit card lender because a consumer has exceeded the credit limit as one of the "other charges which may be imposed" under the account
rather than as a "finance charge" within the meaning of the TILA.
