Third Circuit Upholds Dismissal of TILA Claim Based on Failure to Itemize Annual Credit Card Renewal Notice Fees

On Tuesday, April 11, 2023, a three-judge panel of the United States Court of Appeals for the Third Circuit affirmed the dismissal of a putative class action alleging that JP Morgan Chase Bank, N.A. (Chase) failed to itemize annual fees on its credit card renewal notices in violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.  See Weichsel v. JP Morgan Chase Bank, N.A., No. 21-3371 (decided April 11, 2023) (Opinion).

The plaintiff in Weichsel, a Chase credit card account holder, filed a putative class action complaint alleging that, although his 2019 Chase card renewal notice listed his total annual fee as $525, the renewal notice failed to specify that the total annual fee of $525 was comprised of $450 for the primary cardholder and $75 for the additional card for an authorized user.  Id. at 6.  He asserted that Chase’s failure to itemize each component of the renewal fee in such notice violated TILA and Regulation Z.  The plaintiff sought $1 million in damages on behalf of himself and the putative class, or up to $5,000 in individual statutory damages.  Id.

Chase moved to dismiss the complaint, and the United States District Court for the District of New Jersey granted Chase’s motion, holding that the plaintiff had standing because he suffered an economic injury based on his assertion that he would not have paid the full $525 annual fee had he known it included the additional card fee, but that the plaintiff had failed to allege a TILA violation, as neither “TILA nor Regulation Z expressly mandates disclosure of each individual component of the total annual fee for a credit card account in a renewal notice.”  Id. at 7.

On appeal, the Third Circuit similarly held that, although the plaintiff had standing, he “failed to state a TILA violation because there is no requirement to itemize annual fees on renewal notices.”  Id. at 2-3.  Specifically, the Third Circuit opined that, “while there is an itemization requirement in the statutes and regulations governing periodic disclosures, the same requirement is not included in the statutes and regulations applicable to renewal notices.”  Id. at 13 (citing 12 C.F.R. § 1026.7(b)(6)(iii) and 15 U.S.C. § 1637(b)(6)).  The Third Circuit further held that renewal notices are not subject to the same disclosure requirements as solicitations and applications, which are provided to consumers before the parties have any relationship.  Id.  A solicitation or application must disclose “optional” additional card fees because the creditor does not yet know whether the consumer will add an authorized user to the account (see 12 C.F.R. § 1026, Supp. I, Part 4, cmt. 60(b)(2), ¶ 2), but, in contrast, TILA and Regulation Z require only that a creditor disclose terms that would apply if the account were renewed at the account renewal stage (see 15 U.S.C. § 1637(d)(1)(B); 12 C.F.R. § 1026.9(e)(i)).

The panel emphasized that its holding is “consistent with the purpose of TILA and Regulation Z” because, before a consumer opens an account, the consumer needs more detailed disclosures to be fully informed of the obligations associated with the account, as compared to consumers facing account renewal.  Id. at 15.