August 15, 2003


On June 27, 2003, the United States Supreme Court granted Household Credit Services’ petition for writ of certiorari, thus agreeing to review the decision of the United States Court of Appeals for the Sixth Circuit in Pfennig v. Household Credit Services, Inc. 123 S. Ct. 2639 (2003). In Pfennig, the United States District Court for the Southern District of Ohio held that overlimit fees imposed after a credit card holder is permitted to make purchases beyond the established credit limit fall “squarely within the statutory definition of a finance charge” under the federal Truth in Lending Act as “incident to an extension of credit.” The district court also found Regulation Z’s exclusion of such overlimit fees from the definition of “finance charge” to be invalid. The district court limited its holding to those creditors who knowingly permit the credit card holder to exceed the established credit limit and then impose a fee incident to that extension of credit. The United States Court of Appeals for the Sixth Circuit affirmed the trial court’s decision and later denied a petition for rehearing en banc. The petitioner’s brief in support of overturning the Sixth Circuit’s decision is scheduled to be filed with the Supreme Court by August 18, 2003. It is anticipated that the Supreme Court will issue a decision in June of 2004.

²Jeff Langer and Chuck Gall