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Roberts v. Fleet Bank (R.I.)

August 27, 2003


On Appeal from the United States District Court for the Eastern District of Pennsylvania District Court Judge: The Honorable John P. Fullam (D.C. Civ. No. 00-cv-06142)

Before: Alito, Fuentes and OBERDORFER,*fn1 Circuit Judges

The opinion of the court was delivered by: Fuentes, Circuit Judge


Argued on September 12, 2002


This Truth in Lending Act case concerns a credit card solicitation that Fleet Bank (R.I.), N.A. and Fleet Credit Card Services, L.P. (collectively "Fleet") sent to Appellant, Denise Roberts, encouraging her to open an account with Fleet based on a promise of a "7.99% Fixed" annual percentage rate ("APR"). The solicitation stated that the interest rate was "NOT an introductory rate" and that "[i]t won't go up in just a few short months." The solicitation also stated that "[w]ith an extraordinary 7.99% Fixed APR... the Fleet Titanium MasterCard goes beyond all expectations." Sometime after Roberts opened her Fleet account, the bank sent her a letter stating that it was increasing the 7.99% fixed APR to 10.5%. Roberts brought this class action claiming that Fleet violated the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., when it failed to clearly and conspicuously disclose that the fixed-rate APR that it was offering was limited in duration and subject to its asserted contractual right to change the interest rate at any time. The District Court granted summary judgment to Fleet, concluding that the materials Fleet sent to Roberts allowed it to change the rate.

We agree with Roberts that Fleet's solicitation materials could cause a reasonable consumer to be confused about the temporal quality of the offer. We therefore believe that a material question of fact exists as to whether the bank made any misleading statements in the mailings to Roberts and failed to disclose information required under the TILA "clearly and conspicuously." Accordingly, we reverse the entry of summary judgment and remand for further proceedings.

I. Background

A. Factual

In May 1999, Roberts received a packet of solicitation materials from Fleet urging her to apply for its new "Titanium MasterCard." The packet included an introductory flyer, a solicitation letter, a "Pre-Qualified... Invitation," and an Initial Disclosure Statement ("IDS"). The introductory flyer indicated that the card would have a "7.99% Fixed APR" on both purchases and balance transfers. Under the heading "FINANCIAL ADVANTAGES," the flyer again stated that the fixed APR was 7.99%.

In addition to the flyer, the solicitation letter emphasized that the card would carry a "7.99% Fixed APR." The letter further stated that the "exceptionally low 7.99%" would apply not only to any purchases made with the card but also to any balance transfers from existing credit card accounts to the Titanium account. The letter twice claimed that the 7.99% fixed APR was "NOT an introductory rate," and promised that "[i]t won't go up in just a few short months."

In order to obtain the "Titanium MasterCard," the recipient was required to complete the "Pre-Qualified... Invitation" form. The front side of the invitation indicated that the credit card carried a "7.99% Fixed APR on purchases and balance transfers." On the back of the invitation Fleet listed the "TERMS OF PRE-QUALIFIED OFFER" and the "CONSUMER INFORMATION" sections. The first two sentences of the "TERMS OF PRE-QUALIFIED OFFER" stated the following:

I request a Fleet Titanium MasterCard account upon acceptance of my request by Fleet Bank (RI), National Association in Rhode Island. I agree to the terms of the Cardholder Agreement mailed with my Card, including those which provide that the Cardholder Agreement and my account will be governed by Rhode Island and Federal law and that my Agreement terms (including rates) are subject to change.

The "CONSUMER INFORMATION" section contained the "Schumer Box," the table of basic credit card information required under the TILA, 15 U.S.C. § 1601 et seq., as amended by the Fair Credit and Charge Card Disclosure Act of 1988.*fn2 The Schumer Box contained a column with the heading "Annual Percentage Rate (APR) for Purchases and Balance Transfers." The box beneath that heading indicated "7.99% APR" was the applicable rate. Inside the Schumer Box, Fleet listed two specific circumstances under which that rate could change: (1) if the prospective cardholder failed to meet any repayment requirements; or (2) upon closure of the account. Fleet listed no other circumstances under which the 7.99% APR could be changed.

The IDS instructed the pre-approved applicant to "[p]lease read this together with the TERMS OF PREQUALIFIED OFFER and the CONSUMER INFORMATION enclosed." Under the heading "Rate Information," the IDS indicated that the APR for the Fleet Titanium Card would be 7.99% for any purchases or balance transfers. Like the Schumer Box, the IDS noted two specific circumstances under which Fleet could change the fixed rate: (1) failure of the prospective cardholder to meet any repayment requirements; or (2) closure of the account. Fleet included no other circumstances in the IDS under which it could change the 7.99% APR.

Roberts completed and returned the invitation to Fleet. In June 1999, she received her Fleet Titanium MasterCard, along with the Cardholder Agreement. Section 10 of the Agreement, titled "Annual Percentage Rate," indicated that the APR would be 7.99%. In this section Fleet also reiterated that it reserved the right to change the rate under the circumstances described above. However, in Section 24 of the Cardholder Agreement, titled "Change in Terms," Fleet stated that:

We have the right to change any of the terms of this Agreement at any time. You will be given notice of a change as required by applicable law. Any change in terms governs your Account as of the effective date, and will, as permitted by law and at our option, apply both to transactions made on or after such date and to any outstanding Account balance.

Fleet later sent Roberts a letter notifying her that Fleet would be increasing the fixed-rate APR on the Titanium MasterCard. In July 2000, thirteen months after Roberts had received her ...

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