## Facts

- A credit-card agreement set a $2,000 credit limit but allowed the cardholder to exceed it subject to a $29 over-limit fee for each month the balance exceeded the limit.
- The issuer disclosed the over-limit fee on periodic statements but, consistent with Regulation Z, did not include the fee in the statement’s “finance charge.”
- The Truth in Lending Act (TILA) requires disclosure of “the amount of any finance charge” on periodic statements and defines “finance charge” as amounts imposed “as an incident to the extension of credit.”
- TILA also grants the Federal Reserve Board authority to issue regulations with “classifications” and “differentiations” needed to effectuate TILA, prevent evasion, or facilitate compliance.
- Regulation Z expressly excludes charges for exceeding a credit limit from the definition of “finance charge.”
- The cardholder sued, alleging that excluding over-limit fees from “finance charges” misstated the cost of credit in violation of TILA.

## Issues

1. Whether TILA unambiguously requires over-limit fees to be treated as “finance charges,” making Regulation Z’s exclusion invalid.
2. If TILA is ambiguous on this point, whether Regulation Z’s exclusion of over-limit fees is a reasonable agency interpretation entitled to Chevron deference.

## Decision

- The Supreme Court reversed the Sixth Circuit and reinstated dismissal of the TILA claim.
- The Court held that Regulation Z’s exclusion of over-limit fees from “finance charges” is not an unreasonable interpretation of TILA.
- The Court applied Chevron deference, emphasizing Congress’s broad delegation of rulemaking authority to the Board under TILA.
- The Court concluded that TILA does not unambiguously resolve the classification of over-limit fees and permits the agency’s line-drawing.
- The Court found it reasonable to treat over-limit fees as penalty-type charges associated with going beyond agreed account terms, rather than as standard costs of extending credit.
- The Court noted that the fees were still disclosed on the statement, even if not labeled as “finance charges.”

## Legal Principles

- When Congress delegates broad authority to an agency and statutory text does not directly answer the precise question, courts defer under Chevron to reasonable agency interpretations.
- TILA’s grant of authority to create “classifications” and “differentiations” supports agency decisions to include or exclude particular charges from “finance charges,” so long as the choice is reasonable.
- A statute’s remedial purpose does not displace Chevron deference where Congress assigned interpretive and implementing responsibilities to an agency.

## Conclusion

The Court upheld Regulation Z’s exclusion of over-limit fees from TILA “finance charges,” holding that the statute is ambiguous on the point and that the agency’s classification is reasonable and therefore controlling under Chevron.


Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232 (2004)