Muro v. Target Corp.
2007 U.S. Dist. LEXIS 81776, 2007 WL 3254463, 250 F.R.D. 350 (2007)
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Rule of Law:
Under the Truth in Lending Act (TILA), a credit card account is not considered "opened" for disclosure timing purposes until the consumer affirmatively accepts the credit offer, such as by activating the card. A private plaintiff lacks statutory standing to sue for disclosure violations related to credit card solicitations under 15 U.S.C. § 1637(c) unless they have used the card or paid a fee.
Facts:
- In 1998, Christine Muro applied for and received a Target Guest Card, which is an in-store credit card.
- In December 1999, Muro paid the balance in full and asked Target to close her account.
- Target representatives informed Muro that they would close the account, and she never received another bill for it.
- On August 31, 2004, more than four years later, Muro received an unsolicited Target Visa Card (TVC) in the mail.
- The mailing included written disclosures required by the Truth in Lending Act (TILA), but the information was not organized in a tabular format.
- Muro understood that she would need to activate the TVC before she could use it.
- Muro never activated the TVC, never used it, and never paid any finance charges or other fees in connection with it.
- Muro found the receipt of the unsolicited card upsetting and consequently contacted an attorney.
Procedural Posture:
- Christine Muro filed a class action lawsuit against Target in the U.S. District Court for the Northern District of Illinois, the court of first instance.
- The complaint alleged violations of the Truth in Lending Act for sending an unsolicited credit card (Count I) and for failing to provide proper disclosures (Count II), along with state law claims.
- The court previously granted summary judgment in favor of Target on the class claim portion of Count I based on a 'substitution' defense and denied class certification for that count.
- The court also previously granted summary judgment in favor of Target on all of Muro's state law claims.
- The court allowed Muro's individual claim under Count I to survive summary judgment due to a factual dispute about whether her original account had been closed.
- The court referred the case to a Magistrate Judge for discovery supervision.
- Muro and Target subsequently filed cross-motions for summary judgment on Count II, which are now before the District Court for decision.
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Issue:
Does a creditor violate the disclosure timing requirements of the Truth in Lending Act, 15 U.S.C. § 1637(a), by providing disclosures with an unsolicited credit card before it is activated, and does the recipient have standing to sue for solicitation disclosure violations under § 1637(c) if they never used the card or paid any fees?
Opinions:
Majority - Pallmeyer, J.
No. The disclosures were timely under § 1637(a) because they were provided before the account was opened, and Muro lacks standing to bring a claim under § 1637(c). Regarding the § 1637(a) claim, the court determined that an account is not 'opened' for TILA purposes until the consumer has accepted the credit offer and become contractually bound. This occurs, for example, when the consumer activates the card. Since Target provided the disclosures with the physical card, they were furnished before Muro could have taken any action to open the account. Muro admitted she never activated the card, so the account was never opened, and the disclosures were therefore timely. Regarding the § 1637(c) claim, which governs disclosures in applications and solicitations, the private right of action is limited by § 1640(a). This section precludes a private plaintiff from bringing a § 1637(c) action unless that plaintiff has paid a fee or used the credit card. Muro admitted she never used the card and never paid any fees or finance charges, thus she lacks statutory standing to bring this claim.
Analysis:
This decision provides significant clarity on the temporal requirements for TILA disclosures in the context of unsolicited credit card offers. By holding that an account is not 'opened' until the consumer's affirmative acceptance, the court establishes a bright-line rule that protects creditors who provide all required disclosures along with the physical card itself. This interpretation aligns with the statutory goal of informed credit use, as the consumer has the disclosures in hand before becoming obligated. The ruling also strictly construes the statutory standing requirements of § 1640, preventing lawsuits over solicitation disclosures from individuals who suffered no financial entanglement with the credit product.
