716 F.

2d 104

David GAMBARDELLA, et al., Plaintiffs-Appellees,

v.
G. FOX & CO., Defendant-Appellant.
No. 1188, Docket 83-7063.

United States Court of Appeals,

Second Circuit.
Argued April 28, 1983.
Decided Aug. 9, 1983.

Bourke G. Spellacy, Hartford, Conn. (Updike, Kelly & Spellacy, P.C.,

Hartford, Conn., Sharon L. Aresco, Emily G. Holcombe, Deborah A.
Monteith, Hartford, Conn., of counsel), for defendant-appellant.
David M. Lesser, New Haven, Conn. (Clendenen & Lesser, P.C., William
H. Clendenen, Jr., New Haven, Conn., of counsel), for plaintiffsappellees.
Before LUMBARD, NEWMAN and PRATT, Circuit Judges.
LUMBARD, Circuit Judge:

G. Fox & Co. (G. Fox), a department store chain, appeals from orders of the
District Court for the District of Connecticut, Cabranes, J., granting Mr. and
Mrs. David Gambardella summary judgment, and awarding them statutory
damages of $100 and attorney's fees of $6,222, in their action against G. Fox
alleging violations of federal and state truth-in-lending laws. The
Gambardellas, Connecticut residents, have an open-end credit account with G.
Fox. The Gambardellas allege that the monthly account statements G. Fox sent
them between September 23, 1980 and September 22, 1981 violated the federal
Truth in Lending Act (TILA), 15 U.S.C. Secs. 1601 et seq., and coordinate
Connecticut statutes, Conn.Gen.Stat. Secs. 36-393 et seq., in numerous respects.
Judge Cabranes, on September 20, 1982, granted the Gambardellas summary
judgment on two alleged violations, thus finding it unnecessary to rule upon
four additional claims. We believe that G. Fox's account statements complied
with applicable laws both in those points ruled upon by Judge Cabranes and

those not ruled upon. We therefore reverse the judgment, vacate the award of
attorney's fees, and remand with directions to dismiss the complaint.
2

Congress has authorized the Federal Reserve Board (FRB) to exempt from
compliance with TILA, and with the implementing regulations promulgated by
the FRB, 12 C.F.R. Secs. 226.1 et seq. (Regulation Z), "any class of credit
transactions within any State" that the FRB determines to be subject to
enforceable state law requirements "substantially similar" to federal disclosure
requirements. 15 U.S.C. Sec. 1633. Accordingly, the FRB in 1970 exempted
from compliance with TILA and Regulation Z most classes of credit
transactions in Connecticut, including open end credit accounts. 12 C.F.R. Sec.
226.55(e). Under the exemption the federal disclosure requirements applicable
to Connecticut credit transactions are those imposed by Connecticut's Truth-inLending Act, Conn.Gen.Stat. Secs. 36-393 et seq., and implementing
regulations promulgated by Connecticut's Banking Commissioner, except to the
extent that state law requires disclosures not required by federal law. 12 C.F.R.
Sec. 226.12(c)(2). See Ives v. W.T. Grant Co., 522 F.2d 749, 753 (2d
Cir.1975); Grey v. European Health Spas, Inc., 428 F.Supp. 841, 843 n. 1
(D.Conn.1977). Since Connecticut law is the law applicable to the
Gambardellas' claims, primary citation in this opinion will be made to
Connecticut statutes and regulations, and parallel citations, in parentheses, will
be made to the corresponding provisions of federal law. The federal and state
laws are, however, substantially identical, and are directed toward the same
goals, and thus judicial and administrative interpretations of TILA and
Regulation Z are relevant here. See Bizier v. Globe Fin. Servs., Inc., 654 F.2d
1, 2 (1st Cir.1981).

In 1980 Congress substantially amended TILA by enacting the Truth in

Lending Simplification and Reform Act (TILSRA), passed as Title VI of the
Depository Institutions Deregulation and Monetary Control Act of 1980, Pub.L.
No. 96-221, Sec. 601, 94 Stat. 168 (1980). Because G. Fox issued all of the
challenged account statements prior to TILSRA's effective date of October 1,
1982,1 this case must be decided under TILA, Regulation Z, and Connecticut
law as they stood prior to TILSRA's enactment.

4A. Claims Ruled Upon.

5

1. Amount of Payment Necessary to Avoid Additional Finance Charges.

G. Fox imposes a monthly finance charge upon the average daily balance in its
customers' accounts. The finance charge is assessed at a rate of 1.25% upon the
sum of the customer's daily balances during the monthly billing cycle divided

by the number of days in the cycle. No finance charge is assessed, however, if

the customer's balance at the start of the billing cycle is $3 or less. G. Fox
informs customers of its finance charge policy with disclosures on both the
front and the reverse of its account statements.2 The front advises customers:
"TO AVOID ADDITIONAL FINANCE CHARGES PAY THE NEW
BALANCE IN FULL BY THE PAYMENT DUE DATE"; the reverse,
however, discloses that "No FINANCE CHARGE is assessed in any billing
period in which the 'Previous Balance' ... is $3 or less." The terms "new
balance" and "previous balance" are defined by regulation. New balance is the
account balance at the close, and "previous balance" is the account balance at
the start, of a billing cycle. Sec. 36-395-6(b)(1)(i), (ix), (Sec. 226.7(b)(1)(i),
(ix)). Because the balances in an account at the close of a given billing cycle,
and at the start of the immediately succeeding cycle, are the same, a customer's
"new balance" at the close of a cycle is carried into the next billing cycle as his
"previous balance." When this relationship between "new balance" and
"previous balance" is kept in mind, a contradiction between G. Fox's two
disclosures becomes apparent. The front states without qualification that the
"new balance" disclosed on the periodic statement must be paid in full to avoid
additional finance charges in the subsequent billing period. The reverse,
however, reveals that additional finance charges will not be assessed, even if no
payment is made, if the "new balance" is $3 or less.3 The Gambardellas claim,
and the district judge ruled, that this contradiction violates Connecticut
regulations governing the disclosure of information in periodic statements.4 We
disagree.
7

Creditors who maintain open-end credit accounts must, at the close of each
billing cycle, provide their customers with account statements disclosing the
information specified in Conn.Bank.Reg. Sec. 36-395-6(b)(1), (Sec. 226.7(b)
(1)). The required disclosures must be made "clearly, conspicuously, in
meaningful sequence, ... and at the time and in the terminology prescribed."
Sec. 36-395-5(a), (Sec. 226.6(a)). The creditor may, if it chooses, include in its
periodic statements additional information or explanations but such additional
information may not be "stated, utilized or placed so as to mislead or confuse
the customer or contradict, obscure or detract attention from the information
required to be disclosed." Sec. 36-395-5(b), (Sec. 226.6(c)). The district judge
did not determine whether Sec. 36-395-6(b)(1) requires disclosure of the
amount of payment necessary to avoid additional finance charges. Instead, the
judge ruled that the contradiction between G. Fox's statements rendered them
"unclear and misleading," and placed them in violation of the regulations,
regardless of whether disclosure was required or voluntary. We believe the
judge should have determined, before making his ruling, whether Sec. 36-3956(b)(1) required G. Fox to disclose the information at issue. As Sec. 36-395-

5(a) & (b) establish different standards of review for required and additional
disclosures, analysis of the Gambardellas' claim would have been facilitated by
such a determination. We conclude that the amount of payment necessary to
avoid additional finance charges is an additional, and not a required, disclosure.
8

Our analysis necessarily begins with the express language of the statute and
regulations. See Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 560, 100
S.Ct. 790, 794, 63 L.Ed.2d 22 (1980). Section 36-404(b)(9) & (10) of the
Connecticut General Statutes (15 U.S.C. Sec. 1637(b)(9) & (10)), specifies the
information creditors must reveal about additional finance charges. The statute
is implemented in Conn.Bank.Reg. Sec. 36-395-6(b)(1)(ix), (12 C.F.R. Sec.
226.7(b)(1)(ix)) ("Section 9"), which requires disclosure of:

9 closing date of the billing cycle and the outstanding balance in the account on
the
that date, using the term "new balance", ... accompanied by the statement of the date
by which, or the period, if any, within which, payment must be made to avoid
additional finance charges, except that the creditor may, at his option, and without
disclosure, impose no such additional finance charges if payment is received after
such date or termination of such period.
10

Although this language clearly requires creditors to disclose (1) the closing date
of the billing cycle, (2) the "new balance," and (3) the payment due date,
neither it, nor any other provision of the state or federal regulations, expressly
requires disclosure of the amount of payment necessary to avoid additional
finance charges.

11

The absence of an express disclosure requirement in the regulations is

significant, although not conclusive, evidence that disclosure is not required.
Regulation Z "cannot speak explicitly to every credit disclosure issue,"
Milhollin, 444 U.S. at 560, 100 S.Ct. at 794, and courts therefore must be
prepared, in appropriate cases, to infer from the statutory and regulatory
schemes, and from TILA's underlying policies, disclosure requirements beyond
those expressly stated in the regulations.

12

The regulatory scheme strongly suggests that disclosure of the amount of

payment necessary to avoid finance charges is not required. Particular regard
must be paid Sec. 36-395-6(b)(1)(v), (Sec. 226.7(b)(1)(v)), ("Section 5"),
which requires creditors to disclose certain information about the methods used
to compute finance charges. Section 5 requires disclosure of "each periodic rate
... that may be used to compute the finance charge, whether or not applied
during the billing cycle, and the range of balances to which it is applicable," but
provides that "[i]f a creditor does not impose a finance charge when the

outstanding balance is less than a certain amount, the creditor is not required to
disclose that fact or the balance below which no such charge will be imposed."
The balance at or below which finance charges are not imposed is, of course,
equivalent to the maximum balance which need not be paid to avoid additional
finance charges. Section 5 thus expressly authorizes creditors to withhold, for
purposes of the disclosure it requires, the information the Gambardellas claim
is implicitly covered by Section 9.
13

Sections 5 and 9 are in part directed toward different goals. Customers can use
the interest rates disclosed under Section 5 to check the accuracy of finance
charges already assessed. In contrast, disclosure of closing and payment dates,
and of the account "new balance," under Section 9 helps customers to avoid
new finance charges, and not to review past charges. The Gambardellas claim
that this distinction establishes the irrelevancy of Section 5 to the proper
interpretation of Section 9. They argue that Section 9 is intended to reveal the
information consumers need to avoid additional finance charges, and that the
regulation's goal will be thwarted if Sections 5 and 9 are interpreted in tandem.
We do not agree. Whatever policies lie behind Section 9, the very existence of
the Section 5 exemption reveals that the FRB was aware, when it drafted the
regulations, that some creditors do not impose finance charges upon small
balances. We therefore must presume that the FRB's failure expressly to require
disclosure in Section 9 reflects informed choice, and not oversight. Indeed,
since Section 5 includes a proviso expressly exempting from disclosure
information otherwise covered by the clear language of the regulation, and
since Section 9, giving the language its ordinary meaning, does not require
disclosure of the information exempted from Section 5, we conclude that the
FRB did not intend to require disclosure.5

14

The policy behind TILA supports our interpretation of the regulations.

Congress intended TILA to facilitate the informed use of credit by consumers,
to protect consumers against inaccurate and unfair credit billing practices, and
to enhance competition between credit extenders. See 15 U.S.C. Sec. 1601. To
these ends TILA requires creditors to disclose the information specified in the
Act and Regulation Z. However, the "meaningful" disclosure TILA requires,
Milhollin, 444 U.S. at 568, 100 S.Ct. at 798, should not be equated with
complete disclosure of all credit terms of potential use to consumers. Instead,
TILA requires the FRB to strike "a balance between 'competing considerations
of complete disclosure ... and the need to avoid ... [informational overload].' "
Id., quoting S.Rep. No. 73, 96th Cong., 2d Sess. 3 (1979), U.S.Code Cong. &
Admin.News 1980, pp. 236, 281. The FRB could reasonably have determined,
when drafting Regulation Z, that required disclosure of the amount of payment
necessary to avoid additional finance charges would create more confusion than

benefits. The potential for confusion becomes apparent when one considers the
statement G. Fox would have to make to satisfy the Gambardellas. The
statement the Gambardellas challenge, "TO AVOID ADDITIONAL FINANCE
CHARGES PAY THE NEW BALANCE IN FULL BY THE PAYMENT DUE
DATE," though generally accurate, is misleading to consumers who have "new
balances" of $3 or less. Those consumers need not make any payment to avoid
additional finance charges. G. Fox could correct the inconsistency by stating:
"To avoid additional FINANCE CHARGES pay the New Balance in full
whenever the New Balance is more than $3." This latter statement, however,
undoubtedly would cause many consumers to believe that payment of all but $3
of the "new balance" would eliminate finance charges in the subsequent billing
period. Such is not the case.6 Complete front-side disclosure would benefit only
those few persons with new balances between $0 and $3. Beyond the deference
we must give the regulations, we cannot say the FRB erred in declining to
require disclosure of potentially confusing information that is of slight interest
to a few consumers, and of importance to none.7 Cf. Pittman v. Money Mart,
Inc., 636 F.2d 993, 995-96 (5th Cir.1981) (Full disclosure of creditor's late
charge policy not required where disclosure would unduly complicate
statements provided to consumers).
15

Because the amount of payment necessary to avoid additional finance charges

is not a required disclosure, G. Fox's reverse-side statement, "No FINANCE
CHARGE is assessed in any billing period in which the 'Previous Balance' ... is
$3 or less," must be treated as an additional disclosure reviewable under Sec.
36-395-5(b), (Sec. 226.6(c)). As an additional disclosure, the statement is a
violation if it has been "stated, utilized or placed so as to mislead or confuse the
customer or contradict, obscure or detract attention from the information
required to be disclosed." This regulation states first that the creditor may not
"mislead or confuse the customer." Second, it states that the additional
disclosure may not "contradict, obscure or detract attention from" information
required to be disclosed. Addressing the second prohibition first, it is readily
apparent that G. Fox's reverse-side statement does not "contradict, obscure or
detract attention from" any required disclosure. Section 9, (Sec. 36-395-6(b)(1)
(ix)), supra, requires disclosure of only (1) the closing date, (2) the new
balance, and (3) the payment due date. An additional disclosure of the
circumstances in which additional finance charges are not assessed cannot
impair the customer's understanding of the dates and balances disclosed under
Section 9. Further, we believe that the first part of Sec. 36-395-5(b) proscribes
only presentations of additional information that mislead or confuse the
consumer in his understanding of information required to be disclosed. Accord,
Stewart v. Ford Motor Credit Co., 685 F.2d 391, 394 (11th Cir.1982); Fox v.
Heilig-Meyers Co., 681 F.2d 212, 214 (4th Cir.1982).8 The focus of TILA is

upon the clear and conspicuous disclosure of information specified by statute

and regulation. Section 36-395-5(b) should not be read to depart from the Act's
basic pattern by authorizing courts to premise liability upon an unclear
presentation of optional information.9 G. Fox's reverse-side statement certainly
does not violate the regulation under our interpretation. Even if the statement
confuses consumers about the payment necessary to avoid finance charges (and
we doubt that it does), it could not possibly confuse or mislead anyone about
the information G. Fox discloses under Section 9. Since, then, the only possible
confusion relates to an additional, and not to a required, disclosure, no violation
has occurred.10
16

2. Notice of Reverse-Side Disclosures.

17

A creditor may, if it chooses, place certain required disclosures upon the

reverse of its periodic statements. 12 C.F.R. Sec. 226.7(c), (Sec. 36-395-6(c)). If
a creditor exercises this option, as G. Fox has done, it must disclose that fact to
consumers. Section 226.7(c)(4), (Sec. 36-395-6(c)(4)), provides:

18the creditor exercises any of the options [for reverse-side disclosure] provided for
If
under this paragraph, the face of the periodic statement shall contain one of the
following notices, as applicable: "NOTICE: See reverse side for important
information" ...
19

Section 226.7(c)(4), as it appears in the Code of Federal Regulations, sets the

word "NOTICE " apart from the remainder of the required notice by printing it
in bold, italicized capitals. The remainder of the notice, in contrast, is not
italicized and, with the exception of the capitalized "S" in "See," is printed in
lower case. G. Fox printed the Sec. 226.7(c)(4) notice on the face of its periodic
statements as follows: "NOTICE: SEE REVERSE SIDE FOR IMPORTANT
INFORMATION". G. Fox thus printed the words used in Sec. 226.7(c)(4), but
printed them in a different style. Not only did G. Fox fail to italicize
"NOTICE," it printed the words following the colon in upper rather than lower
case. The Gambardellas claim, and the district judge agreed, that the variance
between G. Fox's print style and that found in Sec. 226.7(c)(4) violated TILA.11
The district judge concluded that the use of the imperative word "shall" in Sec.
226.7(c)(4), together with the differentiation in print style between the required
notice and the remainder of the regulation, indicates that "a creditor must print
the required notice as it appears in the regulation, including its peculiar print
and type characteristics." We disagree.

20

Several factors indicate that Sec. 226.7(c)(4) does not impose print style
requirements. First, the FRB apparently states such requirements expressly

when it intends to impose them. A different provision of Regulation Z, Sec.

226.6(a), provides:
21
[W]here
the terms "finance charge" and "annual percentage rate" are required to be
used, they shall be printed more conspicuously than other terminology required by
this part and all numerical amounts and percentages shall be stated in figures and
shall be printed in not less than the equivalent of 10 point type, .075 inch computer
type, or elite size typewritten numerals ...
22

(emphasis supplied). Section 226.7(c)(4) contains no language similar to that

emphasized above. Where an administrative agency has "carefully employed a
term in one place and excluded it in another," the "usual canons of statutory
construction" counsel that the term not be implied where excluded. Marshall v.
Western Union Tel. Co., 621 F.2d 1246, 1251 (3rd Cir.1980). The FRB's use of
express print style requirements in Sec. 226.6(a), and its omission of such terms
from Sec. 226.7(c)(4), thus suggests that the district judge misread Sec.
226.7(c)(4). Second, neither Regulation Z nor the Connecticut regulations have
themselves consistently used the print style the Gambardellas claim is
mandatory. The FRB promulgated Regulation Z in 1969. The required notice,
as then stated, and as first codified in Sec. 226.7(c)(3) in 1970, was printed as:
"NOTICE: See reverse side for important information." The FRB added italics
in 1976 without explanation. The Connecticut regulations, between 1969 and
1979, printed the required notice as it first appeared in Regulation Z. See Sec.
36-395-6(c)(3) (1970). Connecticut did not, between 1976 and 1979, add to
Sec. 36-395-6(c)(3) the italics the FRB added to Sec. 226.7(c)(4) in 1976.
Beginning in 1979, and continuing thereafter throughout the time period
relevant to this case, Connecticut printed the required notice as: "Notice: see
reverse side for important information." See Sec. 36-395-6(c)(4) (1979). The
Connecticut regulation, so printed, differed from the federal in failing both to
capitalize the "s" in "see," and to capitalize and italicize "Notice." States
granted exemptions under 15 U.S.C. Sec. 1633 must insure that creditors "make
required disclosures and deliver required notices in form, content, and
terminology as prescribed" in Regulation Z. Sec. 226.50(c)(2)(iii) (emphasis
supplied). Accordingly, if Sec. 226.7(c)(4) requires creditors to print the notice
provision in a specific form, Connecticut should have italicized "NOTICE"
after 1976, and should not have amended its regulation in 1979 to create further
distinctions between it and Sec. 226.7(c)(4). Although Connecticut's failure to
track the federal regulation could be accidental, the FRB's failure in 1976 to
explain why it italicized "NOTICE" suggests that it also did not view a change
in print style as a substantive amendment. Lastly, the FRB in 1969 issued a
pamphlet entitled "What You Ought to Know About Federal Reserve
Regulation Z--Truth in Lending Consumer Credit Cost Disclosure." The FRB

intended the pamphlet to help creditors comply with the new regulations, and
included in it model forms covering a variety of disclosure issues. The model
form which illustrated a possible format for periodic statements issued in
connection with open-end credit accounts printed the notice provision as:
"NOTICE: SEE REVERSE SIDE FOR IMPORTANT INFORMATION." In
1969, as noted above, Regulation Z printed the notice provision as "NOTICE:
See reverse side for important information." The FRB thus printed the notice
provision differently in the model form than in the regulations.12 We conclude
that the FRB did not interpret Sec. 226.7(c)(4) to impose print style
requirements.
23

The cases, administrative rulings, and FRB public information letters cited by
the Gambardellas do not support their claim. Although FRB Public Information
Letter No. 477 (May 19, 1971) does indicate that creditors cannot vary the
wording of the notice required by Sec. 226.7(c)(4), it nowhere suggests that the
regulation's print style is mandatory.

24

The FRB intended Sec. 226.7(c)(4) to inform consumers of the presence of

reverse side information. The Gambardellas argue that if Sec. 226.7(c)(4) is
interpreted not to impose print style requirements, creditors will use print styles
inappropriate to the regulation's purpose. They argue that the print style used in
Sec. 226.7(c)(4), because it italicizes and capitalizes "NOTICE," and uses
lower case letters in the remainder of the provision, draws the consumer's
attention to the word "NOTICE " and causes him to read the notice provision.
They claim that other print styles, such as that used by G. Fox, may not
adequately highlight the word "NOTICE" and are less likely to make the
consumer aware of the notice provision. The Gambardellas' argument has no
merit. Because creditors must make required disclosures "clearly" and
"conspicuously," Sec. 226.6(a), (Sec. 36-395-5(a)), and because the Sec.
226.7(c)(4) notice is a required disclosure, it is unnecessary to read print style
requirements into Sec. 226.7(c)(4) to insure adequate disclosure of the notice
provision. Instead, whatever print style a creditor adopts must disclose the
notice provision clearly and conspicuously. We are satisfied that the print style
G. Fox adopted satisfied that standard. G. Fox printed the notice provision all in
capitals at the bottom of its periodic statements, and used type as large and dark
as most upon the page. A consumer who examined his periodic statement with
any care could not fail to see the notice provision. We thus find that G. Fox
complied with Sec. 226.7(c)(4).

B. Claims Not Ruled Upon.

25
26

Because proof of multiple violations in a single periodic statement does not

increase the plaintiff's recovery, Conn.Gen.Stat. Sec. 36-407(g), (15 U.S.C.

Sec. 1640(g)), the district judge found it unnecessary to decide all of the
Gambardellas' claims. Instead, after granting the Gambardellas summary
judgment on two claims, he declined to rule upon the four claims remaining.
Since we, in turn, have reversed the grants of summary judgment, we proceed
to consider the four claims not ruled upon below. We see no reason for a
remand. Where, as here, the language and format of the periodic statement are
undisputed, and the sole issue is whether required disclosures have been made
clearly and conspicuously, or whether additional disclosures confuse or
mislead, the court may appropriately decide the plaintiff's claims as raising
issues of law. See Ives v. W.T. Grant Co., 522 F.2d 749, 759 (2d Cir.1975)
(affirming grant of summary judgment to truth-in-lending plaintiff and
rejecting defendant's argument that district court erred in failing to hold
evidentiary hearing); contra, Barber v. Kimbrell's, Inc., 577 F.2d 216, 221 (4th
Cir.), cert. denied, 439 U.S. 934, 99 S.Ct. 329, 58 L.Ed.2d 330 (1978). We see
little chance that a remand would produce competent evidence, other than the
documents themselves, relevant to the Gambardellas' claims. Cf. Enright v.
Beneficial Fin. Co. of N.Y., 527 F.Supp. 1149, 1156 (N.D.N.Y.1981). For that
reason, and because the parties have fully briefed the additional claims, we
have reviewed the claims and find that all four lack merit.
27

1. Failure to Use Dollar Signs.

28

G. Fox prints two horizontal columns at the top of its periodic statements. The
top column, reading from left to right, contains the terms "Previous Balance,"
"Finance Charge," "Purchases," "Payments," "Credits," and "New Balance."
The second column, located directly beneath the first, contains blank spaces
into which G. Fox inserts the appropriate monetary amounts for each customer
at the close of a billing cycle. Each of the amounts so inserted appears directly
beneath a descriptive heading in the top column, e.g., "Previous Balance." The
amounts are separated from one another by arithmetical symbols indicating that
"Previous Balance" plus "Finance Charge" plus "Purchases" minus "Payments"
minus "Credits" equals "New Balance." G. Fox does not precede the numbers
in the second column with dollar signs ($). Similarly, further down on the
statements, G. Fox prints monetary amounts without dollar signs under the
headings "Average Daily Balance," "Past Due Amount," and "Minimum
Payment." G. Fox does use dollar signs in disclosing, at the bottom of the
statements, certain facts about the past month's finance charge. There, G. Fox
prints dollar signs before the actual amounts of the finance charge and of the
minimum finance charge, if any, and the range of balances to which differing
periodic rates may be applicable.

29

The Gambardellas claim that G. Fox violated the regulations by failing to print
dollar signs before all monetary amounts. They argue that dollar signs are
needed clearly to disclose that the figures appearing on a customer's statement
refer to dollar amounts, and that the absence of such signs rendered G. Fox's
disclosure of monetary amounts unclear or confusing, in violation of Sec. 36395-5(a) & (b), (Sec. 226.6(a) & (c)). They argue that G. Fox's use of dollar
signs at the bottom of its statements, but not elsewhere, enhances the potential
for confusion.

30

We see no merit in this ridiculous claim. There is no express regulatory

requirement that creditors precede monetary amounts with dollar signs, nor do
we see any realistic possibility that G. Fox customers would fail to realize
which numbers appearing on their statements refer to dollar amounts. Each of
the figures the Gambardellas claim should have been preceded by a dollar sign
stands by itself, apart from any text, under a column heading which can
reasonably be read only to refer to an amount of money. Under these
circumstances dollar signs were not required. See Household Consumer
Discount Co. v. Payne, 62 Ohio App.2d 181, 405 N.E.2d 729 (1978); GAC Fin.
Corp. of Spokane v. Burgess, 16 Wash.App. 758, 558 P.2d 1386 (1977).13

31

2. Use of "CR" Symbol.

32

G. Fox uses the symbol "CR" in several places on its periodic statements. The
central portion of the statements consists of five vertical columns headed, from
left to right, "Date," "Reference No.," "Store/Dept No.," "Description of Dept,"
and "Amount." G. Fox reports receipt of a payment by printing the word
"Payment" under "Description of Dept," and printing the amount of payment,
followed by "CR," under "Amount." If the consumer has received a credit
during the billing period, G. Fox identifies the store department which granted
the credit, e.g., "Career Separates," under "Description of Dept," and under
"Amount" prints the amount of the credit followed by "CR." Finally, if the
consumer's "Previous Balance" or "New Balance" is a credit balance, G. Fox
prints the amount of the balance, followed by "CR," under the appropriate
heading at the top of the statement.

33

G. Fox thus uses "CR" to denote payments, credits, and credit balances. The
Gambardellas claim that G. Fox's multiple use of "CR" drains the symbol of
meaning and renders the disclosures it accompanies unclear and confusing, in
violation of the regulations. We disagree.

34

The regulations require creditors to disclose their customers' balances at the

start and at the close of the billing cycle, and appropriately to identify credit
balances. Conn.Bank.Reg. Sec. 36-395-6(b)(1)(i) & (ix), (Sec. 226.7(b)(1)(i) &
(ix)). G. Fox has complied with this requirement. It discloses starting and
closing balances under the headings "Previous Balance" and "New Balance." It
identifies credit balances by appending "CR" to the amount stated, and by
explaining on the reverse of its statements that "[t]he symbol 'CR' when
appearing with a balance indicates a credit balance." FRB Public Information
Letter No. 1027 (April 15, 1976) states that the symbol "CR," placed before or
after a balance amount, appropriately identifies a credit balance if the disclosure
statement explains the symbol's meaning. G. Fox employed the format
approved in Letter No. 1027, and its use of "CR" to denote credit balances must
be upheld.
35

G. Fox appends "CR" to amounts recorded as payments or credits because all

such amounts result in credits (as opposed to debits) to the customer's account.
The symbol "CR" is thus meant not to distinguish payments from other credits,
but merely to inform the consumer that the amount recorded redounds to his
benefit. Creditors must, however, separately disclose payments and credits, and
must specifically identify all such amounts. Sec. 36-395-6(b)(1)(iii), (Sec.
226.7(b)(1)(iii)). The issue, therefore, is whether G. Fox's use of "CR," as an
accounting symbol, in connection with both payments and credits violates its
duty to make clear and separate disclosures. We conclude that it does not.

36

G. Fox specifically identifies payments on its statements by printing "Payment"

directly opposite the amount recorded in the "Amount" column. The "CR"
symbol appended to the recorded amount is therefore unlikely to cause a
consumer to believe that credit has been granted for some reason other than
payment. G. Fox discloses credits other than payments by identifying the
department that granted credit opposite the amount recorded. Although G. Fox
does not print the word "credit" directly opposite credit amounts separately
recorded in the center of the form, it does print, under the heading "Credits" at
the top of the form, the total amount of credits for the billing period. A
consumer who doubts the nature of a recorded item may thus compare the
amounts of the items separately recorded to the total amount stated under
"Credits." Such cross-checking should easily distinguish credit items from
payments.

37

3. Disclosure of Minimum Finance Charge.

38

Section 36-396-6(b)(1)(iv), (Sec. 226.7(b)(1)(iv) ), requires disclosure of all

finance charges, including any minimum finance charge, assessed during the
billing period. G. Fox assesses a minimum finance charge of 50cents upon the

accounts of those of its Massachusetts and Rhode Island customers who had an
average daily balance of $3 to $34 during the billing period. Conn.Gen.Stat.
Sec. 42-133c limits the interest rates creditors may charge on open-end credit
accounts. The practical effect of Sec. 42-133c is to prohibit minimum finance
charges in Connecticut, and G. Fox does not impose such charges in
Connecticut. G. Fox uses the same disclosure form for the periodic statements
it sends customers in Connecticut, Massachusetts, and Rhode Island. At the
bottom of the form G. Fox prints:
39

[ ] FINANCE CHARGE is due to a minimum charge of $ .

40

On periodic statements sent Massachusetts and Rhode Island customers who

have been assessed a minimum finance charge, G. Fox places an "x" in the box
to the left of the words "FINANCE CHARGE" and writes the amount of the
charge after the dollar sign at the end of the sentence. Periodic statements sent
Connecticut customers always leave blank both the box at the beginning of the
sentence and the space at the end.

41

The Gambardellas claim that the quoted sentence, when included in periodic
statements sent Connecticut customers, breached G. Fox's duty clearly to
disclose finance charges. They say that the sentence could confuse Connecticut
consumers about the applicability of minimum charges. We cannot agree.
Blank-box formats are in common use on many kinds of forms, financial and
otherwise, to indicate the applicability of various options stated on the forms. In
Official Staff Interpretation No. FC-0081, 42 Fed.Reg. 31,430 (June 3, 1977),
the FRB approved a creditor's proposal to use a blank-box format in a consumer
loan form. See also Griggs v. Provident Consumer Discount Co., 680 F.2d 927,
931 n. 4 (3rd Cir.) (blank-box format did not violate TILA), vacated on other
grounds, --- U.S. ----, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982). Of course, the
FRB, in Official Staff Interpretation No. FC-0081, did not give unqualified
approval to all blank-box formats, and courts must, in each case, consider
whether the creditor's particular format clearly disclosed required information.
Here, we are satisfied that disclosure was clearly made. A consumer would
most likely read a G. Fox periodic statement in which both the box at the
beginning and the blank at the end of the sentence were left empty to mean that
no minimum finance charge had been imposed. Moreover, G. Fox dispels any
possible confusion by printing on the reverse of its statements: "For residents of
Connecticut ..., there is no minimum FINANCE CHARGE." The sentence at
issue did not breach G. Fox's duties under Sec. 36-395-6(b)(1)(iv).

42

The Gambardellas also claim that because Connecticut prohibits minimum

finance charges, G. Fox may not include the sentence in periodic statements

sent Connecticut consumers. They argue that the Act prohibits a creditor from
claiming to employ practices that are unlawful in the consumer's state. Courts
have been unable to agree whether a disclosure statement which claims a right
or interest prohibited by state law violates the Act. Compare Tinsman v. Moline
Beneficial Fin. Corp., 531 F.2d 815 (7th Cir.1976) (violation), with Pennino v.
Morris Kirschman & Co., 526 F.2d 367, 371 (5th Cir.1976) (no violation). See
Veney v. First Virginia Bank-Colonial, 535 F.Supp. 181, 183-190
(E.D.Va.1982) and cases discussed therein. But if the Act does prohibit such
claims (a question we need not address), there surely is no violation if the
creditor restricts its claim to those consumers against whom the claimed right
or interest may lawfully be asserted. Where a creditor's multi-state disclosure
form clearly indicates that an interest lawful in only some states is not claimed
where it is prohibited, the consumer's rights are not misstated and no basis for
liability exists. Such is the situation here. G. Fox's periodic statements clearly
reveal that Connecticut accounts are not subject to minimum finance charges.14
43

4. Disclosure of Rates Used to Compute Finance Charge.

44

Conn.Bank.Reg. Sec. 36-395-6(b)(1)(v), (Sec. 226.7(b)(1)(v)) requires

disclosure of:[E]ach periodic rate, using the term "periodic rate" or "rates", that
may be used to compute the finance charge, whether or not applied during the
billing cycle, and the range of balances to which it is applicable, and the
corresponding annual percentage rate determined by multiplying the periodic
rate by the number of periods in a year.

45

G. Fox applies a monthly interest charge of 1.25% to all of its Connecticut

accounts, regardless of the amount of the balance. On Massachusetts and
Rhode Island accounts, however, G. Fox applies different interest rates to
different ranges of balances. The application of different rates to different
ranges of balances is called a "break rate" system. G. Fox uses the same form
for the periodic statements it sends Connecticut, Massachusetts, and Rhode
Island customers. The form is designed to accommodate disclosure of a break
rate system that employs two different interest rates. When completed and sent
to Connecticut customers, who are not subject to break rates, the form appears
as follows:

THAT PORTION OF THE

46

AVERAGE DAILY BALANCE

UP TO OR EQUAL TO
$.00
THAT PORTION OF THE
AVERAGE DAILY BALANCE
IN EXCESS OF

PERIODIC
RATE
1.25% PER BILLING
CYCLE
PERIODIC
RATE

ANNUAL
PERCENTAGE
RATE
15%
ANNUAL
PERCENTAGE
RATE

$.00

1.25% PER
BILLING CYCLE

15%

47

G. Fox thus tells Connecticut consumers that the portion of their balances up to
or equal to $0 is subject to a periodic rate of 1.25%, and to an annual rate of
15%. It also discloses that the same rate is applied to balances exceeding $0.
The Gambardellas claim that G. Fox has breached its Sec. 36-396-6(b)(1)(v)
duty clearly to disclose periodic and annual rates. They argue that G. Fox's
statement regarding the interest rate applied to balances up to or equal $0 is
inaccurate and misleading. We agree with the Gambardellas that the statement
is inaccurate since, in fact, G. Fox does not impose finance charges (or pay
interest) on credit balances. We find, however, that any technical inaccuracy in
the statement is unlikely to mislead consumers, and that G. Fox's disclosure of
periodic and annual rates, though hardly made in a model format, is sufficient
under the law.

48

FRB Public Information Letter No. 651 (Dec. 15, 1972), states that the "range
of balance" disclosure required by Sec. 226.7(b)(1)(v) is "intended to show the
break point where there was more than one rate applicable to the account." The
Letter informed a creditor proposing to apply a single periodic rate that it was
not required separately to disclose ranges of balances. Similarly, FRB Public
Information Letter No. 1108 (September 1, 1978), states that Sec. 226.7(b)(1)
(v) requires more than one annual percentage rate disclosure "only when
different periodic rates are applied to different ranges of balances." These
letters indicate that G. Fox was not required to make more than one disclosure
of periodic and annual rates in Connecticut, but they do not, we think, indicate
that G. Fox was prohibited from doing so. Instead, the inquiry must be whether
G. Fox clearly and conspicuously disclosed periodic and annual rates. We think
that it did. G. Fox's two disclosures state, in effect, that the same interest rates
are applied to balances up to or equal to $0 as to balances greater than $0. A
consumer is therefore unlikely to believe, the range of balance disclosures
notwithstanding, that more than one periodic or annual rate will be applied to
his account. G. Fox prints the following statement immediately above the
portion of the form reproduced above: "FINANCE CHARGE OF $ is the result
of the application of the following periodic rate(s)." The parentheses
surrounding the "s" in "rate(s)" implicitly informs the consumer that only one
periodic rate may be applicable. Finally, to the extent that G. Fox's statement
concerning balances equal to or less than $0 is inaccurate, it implies that
finance charges are assessed on credit balances. Few, if any, consumers are
unaware that finance charges are imposed on amounts they owe the company,
and not on amounts the company owes them.
It is true that G. Fox's disclosure of periodic and annual rates could be

49

It is true that G. Fox's disclosure of periodic and annual rates could be

improved upon. G. Fox could simply inform Connecticut consumers that
finance charges are assessed on the average daily balance at a periodic rate of
1.25% and an annual rate of 15%, whenever the average daily balance is greater
than $0. The multi-state disclosure form adopted by G. Fox does convey that
information to Connecticut consumers, but requires the consumer to exercise
some degree of care and study. Obviously, G. Fox's disclosure concerning
balances less than or equal to $0 is meaningless and could be deleted without
loss. TILA, however, does not require perfect disclosure, but only disclosure
which clearly reveals to consumers the cost of credit. See Dixon v. D.H.
Holmes Co., 566 F.2d 571 (5th Cir.1978). Because the statements G. Fox sent
Connecticut consumers, read as a whole, clearly disclosed periodic and annual
rates, the imperfections in format did not violate the law.

50

Accordingly, we reverse the judgment, vacate the award of attorneys' fees, and
remand the case with directions to dismiss the complaint.APPENDIX

51

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT

VIEWABLENOTE: OPINION CONTAINS TABLE OR OTHER DATA
THAT IS NOT VIEWABLENOTE: OPINION CONTAINS TABLE OR
OTHER DATA THAT IS NOT VIEWABLENOTE: OPINION CONTAINS
TABLE OR OTHER DATA THAT IS NOT VIEWABLE
NEWMAN, Circuit Judge, concurring:

52

I concur in the Court's judgment and in all portions of Judge Lumbard's opinion
except Part A.1. concerning the claim that G. Fox failed to disclose, or
misleadingly disclosed, the amount of the payment necessary to avoid
additional finance charges. In the majority's view, no violation occurred
because, under its construction of the Truth in Lending Act (TILA), 15 U.S.C.
Sec. 1637(b)(10) (1976), and Regulation Z, 12 C.F.R. Sec. 226.7(b)(1)(ix), p.
593 (1982) (pre-October 1, 1982, version), a creditor must notify a customer
only of the date by which payment must be made to avoid finance charges, but
not the amount of such payment. In my view, that construction is at odds with
both common sense and the interpretation of the Federal Reserve Board, and I
write separately to set forth the basis of my disagreement with that construction.
Nevertheless, I agree, for reasons explained below, that the defendant's
disclosure of the payment necessary to avoid finance charges was not in
violation of TILA.

53

The front side of the printed billing form sent by defendant G. Fox & Co. to the
plaintiffs contains this statement: "To avoid additional FINANCE CHARGES

pay the new balance in full by the payment due date." The reverse side contains
this statement: "No FINANCE CHARGE is assessed in any billing period in
which the 'Previous Balance' ... is $3 or less...." In the District Court the parties
assumed that the practice of G. Fox was to impose a finance charge in the
billing cycle that followed receipt of a bill unless the "previous balance" listed
on that bill was $3 or less. While the case has been pending in this Court, the
parties have learned that the policy of G. Fox is in fact somewhat more
generous to customers: no finance charge is imposed if the previous balance is
$3 or less, or if the customer pays all but $3 of his new balance, or if the
average daily balance is $3 or less.
54

The majority opinion, viewing the case solely on the facts as they were thought
to exist in the District Court, observes that the statement on the front side of the
bill is "generally accurate," at 110, though "misleading to customers who have
'new balances' of $3 or less." Id. The majority then concludes (1) that, under
TILA and Regulation Z, the amount of payment necessary to avoid additional
finance charges is not a required disclosure and that (2) misleading statements
that concern only non-required information do not violate the Act. I disagree
with the first of these interpretations.1

I.
55

One of the disclosures TILA requires a creditor to make in a bill under an openend consumer credit plan is "the date by which ... payment must be made to
avoid additional finance charges." 15 U.S.C. Sec. 1637(b)(10)(1976), 12 C.F.R.
Sec. 226.7(b)(1)(ix), p. 593 (1982) (pre-October 1, 1982, versions).2 Purporting
to defer to the expertise of the Federal Reserve Board (the Board), the majority
reads this language rigidly to mean that a creditor must disclose only the date
by which payment must be made to avoid additional finance charges but not the
amount of the payment that must be made to avoid such charges. If we had no
guidance from the Board, I would challenge that construction, since it seems
odd, to say the least, to require a creditor to tell a customer when he must make
a payment but not what payment he must make. Indeed, it is difficult to
imagine how a creditor could tell a customer when to pay without also telling
him the amount to pay. An instruction to make an unspecified payment by a
specified date would hardly be informative.

56

Fortunately the Board has made explicit what common sense would tell us is
the proper way to construe the payment date provision. On May 5, 1980, the
Board proposed a revised version of this provision, requiring the following
disclosure:

57

(11) Free-ride period. The date by which ... the new balance must be paid in
order to avoid the imposition of finance charges. If only a portion of the new
balance need be paid to avoid a finance charge, that amount must be
disclosed....

58

12 C.F.R. Sec. 226.5(c)(11) (proposed), 45 Fed.Reg. 29702, 29738 (May 5,

1980). Significantly, the Board noted that this proposal involved "no
substantive change" in the existing regulation, 12 C.F.R. Sec. 226.7(b)(1)(ix),
p. 593 (1982), which governs this case. 45 Fed.Reg. 29712. Thus, in the view
of the Board, the payment date provision has always meant that the creditor
must disclose the amount of payment necessary to avoid a finance charge; if the
full amount of the new balance must be paid, the date by which such payment
must be made is required to be disclosed, and if "only a portion" of the new
balance must be paid, "that amount must be disclosed." The final version of the
revised payment date provision combines the date and amount disclosures by
requiring disclosure of "[t]he date by which ... the new balance or any portion
of the new balance must be paid to avoid additional finance charges." 12 C.F.R.
Sec. 226.7(j), p. 837 (1982).

59

The majority attaches significance to the fact that the final version of section
226.7(j) omits the separate sentence, which had appeared in proposed section
226.5(c)(11), requiring disclosure when only a portion of the new balance must
be paid. In the majority's view, the deletion of this separate sentence implies a
decision not to require such disclosure. 716 F.2d at 109 n.5. I would not draw
that inference for two reasons. First, an interpretation that reads the amount of
required payment out of section 226.7(j) is so contrary to common sense that it
should be resisted if any other construction is possible. Second, the Board
attaches no such significance to the revision of its wording of proposed section
226.5(c)(11). On December 5, 1980, the Board published a revised version of
proposed section 226.5(c)(11), renumbering it as section 226.7(k). 45 Fed.Reg.
80699 (1980). That revision deleted the second sentence of proposed section
226.5(c)(11), combining its content into a slightly expanded version of the first
sentence. The commentary to the December 5, 1980, draft makes no mention of
this revised wording. Since the Board's commentary to its proposed and final
versions of Regulation Z always notes, and explains the reasons for, any
substantive change from an earlier proposed version, the absence of
explanation indicates that no change of substance had occurred. Significantly,
on April 7, 1981, when the Board published the current version, renumbered as
section 226.7(j), which virtually tracked proposed section 226.7(k), it explicitly
noted that this final version was "substantially the same" as the then existing
section 226.7(b)(1)(ix). 46 Fed.Reg. 20860 (1981).

60

The Supreme Court has instructed us to heed the Board's views, expressed in
connection with the revision of Regulation Z, to the extent that they explain the
meaning of TILA and the original version of Regulation Z. See Anderson Bros.
Ford v. Valencia, 452 U.S. 205, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981). I
therefore conclude that, as a general rule, TILA requires a creditor to disclose
the amount of payment necessary to avoid finance charges.

II.
61

Since, in my view, the amount of the necessary payment is a required

disclosure, I must consider the issue, not reached by the majority, whether the
G. Fox disclosures concerning the necessary payment were in violation of
TILA. On the facts as presented in the District Court, Judge Cabranes
concluded that there was a violation because of the apparent contradiction
between the front-side and reverse-side statements concerning the payment
needed to avoid finance charges. In the plaintiffs' view, the facts as the parties
now understand them to be show that the front-side statement itself violates
TILA by informing the customer that he must pay his new balance in full to
avoid finance charges, whereas in fact a finance charge will not be imposed if
the customer pays all but $3 of his bill. That is surely a plausible contention,
but it is refuted by the explicit authority that Regulation Z confers on a creditor
not to disclose the fact that it imposes no finance charge on small balances.
Regulation Z provides:

62a creditor does not impose a finance charge when the outstanding balance is less
If
than a certain amount, the creditor is not required to disclose that fact or the balance
below which no such charge will be imposed.
63

12 C.F.R. Sec. 226.7(b)(1)(v) n. 9a, p. 593 (1982) (pre-October 1, 1982,

version).3 The evident purpose is to permit a creditor to forgo charging interest
on small balances without the need to inform customers of this generosity. It
seems obvious that the non-disclosure permission is closely related to the
forgoing of interest: if all customers were told that they need not pay the last $3
of their bill to avoid finance charges, it is reasonable to think that many would
withhold the last $3, thereby making it less likely that the creditor could afford
to forgo imposing interest charges on the few who now do so. The Federal
Reserve Board apparently believes that creditors can adopt their own de
minimis rules without disclosure.

64

At first glance, non-disclosure of the amount below which no finance charge

will be imposed may seem inconsistent with the requirement of disclosure of

the amount of payment necessary to avoid finance charges. But an

interpretation is available that accords meaning to both provisions. The
disclosure requirement, in its currently applicable version, requires notification
of the date by which "the new balance or any portion of the new balance" must
be paid to avoid finance charges. 12 C.F.R. Sec. 226.7(j), p. 837 (1982). That
means that if, for example, a customer's new balance is $300, the creditor must
inform him that he must pay either the entire balance or some portion of it (for
example, one-third) by the due date to avoid finance charges in the next billing
cycle. Creditors frequently require prompt payment of at least some stated
fraction of an outstanding balance. At the same time, the non-disclosure
permission allows a creditor, without notice, to forgo finance charges on small
balances, below a certain amount. The Board is entitled to think that a customer
needs to know whether he must pay all or some stated fraction of his bill to
avoid incurring finance charges, but need not know that his failure to pay the
last $3 of his bill, or the maintenance of a balance of less than $3, will not
subject him to finance charges.4
65

Plaintiffs contend that the non-disclosure permission concerning small balances

applies only to a creditor's decision not to impose a finance charge on a small
balance in a current billing cycle and does not entitle a creditor to withhold the
fact that no finance charge will be imposed in a subsequent billing cycle if the
balance in that cycle is brought below a certain amount. In their view, a G. Fox
customer is entitled to know that he can pay all but $3 of his new balance and
still avoid finance charges on his purchases in the next billing cycle. I disagree.
The wording of the non-disclosure permission in Regulation Z refers to
forgoing finance charges when the "outstanding balance" is below a certain
amount, making no distinction between a "new balance" in a current billing
cycle and the customer's balance during the next billing cycle after making a
payment. And the wording permits non-disclosure of the balance below which
a finance charge "will" not be imposed. Moreover, it would make little sense to
permit a creditor to conceal the fact that it does not impose finance charges on
new balances of less than $3 and still require disclosure of the fact that finance
charges will not be imposed when a customer's payment brings his outstanding
balance down to $3. In both instances, interest is not being charged on small
balances, and the Board does not require disclosure of that fact.

66

I conclude, therefore, that G. Fox did not violate TILA when it disclosed that
payment of the new balance would avoid additional finance charges without
informing the plaintiffs of the fact, now known, that finance charges would not
be imposed if all but $3 of the new balance was paid. And, since G. Fox did not
have to disclose any aspect of its willingness to forgo finance charges on
balances under $3, it did not violate TILA, on the facts as known in the District

Court, by disclosing on the reverse side of its bill one of the circumstances
under which it would do so. Since the regulation permits a disclosure that full
payment is necessary to be contradicted by an undisclosed policy of not
imposing finance charges on small balances, it is not violated by a partial
disclosure of that policy.
67

For these reasons I conclude that G. Fox's billing statement did not violate the
payment date provision of TILA and therefore concur in the judgment and in all
portions of Judge Lumbard's opinion except Part A.1.

TILSRA required the FRB to promulgate implementing regulations at least one

year prior to the effective date of the Act and authorized any creditor to comply
with the revised regulations prior to the effective date. Pub.L. No. 96-221, Sec.
625, 94 Stat. 185-86 (1980). The FRB accordingly revised Regulation Z,
effective April 1, 1981, 46 Fed.Reg. 20,848 (1981), but with compliance being
optional until the Act's effective date. G. Fox does not claim to have complied
with TILSRA between April 1 and September 22, 1981

A G. Fox account statement, both front and back, has been reproduced as an
appendix to the court's opinion. The reader may find it useful periodically to
refer to the reproduced statement

G. Fox's periodic statements specify a "payment due date" by which the

customer must pay the new balance to avoid additional finance charges.
Payment of all but $3 of the new balance by the payment due date will not
prevent finance charges from being assessed in the subsequent billing period.
Instead, unless the customer pays the new balance in full (or has a credit
balance), finance charges will be imposed whenever the new balance is greater
than $3. The following chart may help clarify the operation of G. Fox's finance
charge policy:

Ending Date of
Billing Period
Jan. 1, 1981
Feb. 1, 1981
March 1, 1981
April 1, 1981

Previous
Balance
$ 0.00
$100.00
$ 3.80
$ 2.93

Purchases
$100.00
$ 0.00
$ 0.00
$150.00

Payments
$ 0.00
$97.00
$ .90
$ 0.00

Finance
Charge
No
Yes
Yes
No

Approx.
Amount
of Fin.
Charge
$.80
$.03
-

New
Balance
$100.00
$ 3.80
$ 2.93
$152.93

As the chart makes apparent, when the customer's new balance is $3.00 or less,
additional finance charges are not imposed regardless of the amount of the
average daily balance in the subsequent billing period.

The Gambardellas do not claim that they were actually misled by the
contradiction or by any other feature of G. Fox's periodic statements, or that
they have suffered actual damages. It is well settled, however, that proof of
actual deception or damages is unnecessary to a recovery of statutory damages
under 15 U.S.C. Sec. 1640(a). See, e.g., Brown v. Marquette Savings & Loan
Assoc., 686 F.2d 608, 614 (7th Cir.1982); Zamarippa v. Cy's Car Sales, Inc.,
674 F.2d 877, 879 (11th Cir.1982); Dzadovsky v. Lyons Ford Sales, Inc., 593
F.2d 538, 539 (3rd Cir.1979); Lewis v. Walker-Thomas Furniture Co., 416
F.Supp. 514, 516 (D.D.C.1976)

On May 5, 1980 the FRB released a proposed revised version of Regulation Z

implementing the newly enacted Truth in Lending Simplification and Reform
Act. 45 Fed.Reg. 29,702 (1980). The proposed version of Regulation Z split the
disclosure requirements of Sec. 226.7(b)(1)(ix) between two provisions, Sec.
226.5(c)(10) & (11), and required disclosure of:
(11) Free-ride period. The date by which or the time period within which the
new balance must be paid in order to avoid the imposition of finance charges. If
only a portion of the new balance need be paid to avoid a finance charge, that
amount must be disclosed. The creditor may, at its option and without
disclosure, impose no finance charge when payment is received after the
specified date or time period.

45

Fed.Reg. at 29,738 (emphasis supplied). The language emphasized above

seems to require disclosure of the range of balances upon which additional
finance charges will not be imposed. In its commentary to proposed Regulation
Z the Board stated that Sec. 226.5(c)(11) was not intended to effect any
"substantive change" to Sec. 226.7(b)(1)(ix). The Gambardellas argue that Sec.
226.7(b)(1)(ix) must therefore be read implicitly to require the disclosures
expressly mandated by proposed Sec. 226.5(c)(11). Although we recognize that
the Board's commentary to draft regulations published under TILSRA is
relevant to interpretive issues under TILA, see Anderson Bros. Ford v.
Valencia, 452 U.S. 205, 216 n. 13, 101 S.Ct. 2266, 2272 n. 13, 68 L.Ed.2d 783
(1981), we do not think that the Board's statement concerning Sec. 226.5(c)(11)
conclusively interprets Sec. 226.7(b)(1)(ix). The statement directly interprets
not Sec. 226.7(b)(1)(ix), but rather a proposed regulation upon which the Board
was soliciting public comment. As the Board made its statement when it was
still exploring Sec. 226.5(c)(11)'s ramifications, we are reluctant to accord the
statement the same weight that is due the commentary to the Board's final
announcement of revised Regulation Z. Cf. Id., 452 U.S. at 215-17, 101 S.Ct. at
2271-73. In its subsequent draft of revised Regulation Z the Board decided to
delete the language expressly requiring disclosure of the amount of payment
necessary to avoid finance charges. On December 5, 1980 the FRB issued a

second proposed draft which redesignated the relevant portion of Sec. 226.7(b)
(1)(ix) as Sec. 226.7(k) and required disclosure of:
(k) Free-ride period. The date by which or the time period within which the
new balance or any portion of the new balance must be paid in order to avoid
the imposition of additional finance charges.
45

Fed.Reg. 80,699 (1980). The commentary to the December 5th draft gives no
reason for the deletion in Sec. 226.7(k) of the second sentence of Sec. 226.5(c)
(11). Proposed Sec. 226.7(k) became, with minor syntactical changes, the first
sentence of final regulation Sec. 226.7(j). Thus the final TILSRA regulations do
not expressly require disclosure of the range of balances upon which additional
finance charges are not assessed. The fact that the FRB, during the revision
process, considered and rejected language that expressly required disclosure,
constitutes some evidence that disclosure is not required by new Sec. 226.7(j)
or by previous Sec. 226.7(b)(1)(ix). See Fox v. Standard Oil Co., 294 U.S. 87,
96, 55 S.Ct. 333, 337, 79 L.Ed. 780 (1935) (rejection of proposed amendment
as relevant factor in statutory interpretation). In light of the meaning that the
regulatory scheme seems to give Sec. 226.7(b)(1)(ix), we doubt that the FRB
deleted the second sentence of proposed Sec. 226.5(c)(11) in the belief that it
was superfluous

See note 2, supra

We must emphasize that G. Fox's finance charge policy does not authorize
consumers with new balances between $0 and $3 to withhold payment.
Although consumers with such balances are not subject to additional finance
charges, they must make some payment by the payment due date to avoid
delinquency

In Ives v. W.T. Grant Co., 522 F.2d 749, 761 n. 29 (2d Cir.1975), we stated that
"(d)escribing a security interest when there is none may ... violate Conn.Regs.
Sec. 36-395-5(b) ... because it would constitute additional but misleading
information." Our statement in Ives is consistent with the interpretation we now
give Sec. 36-395-5(b). Because the regulations require disclosure of security
interests, see Sec. 36-395-7(b)(5), (Sec. 226.8(b)(5)), a creditor's claim to have
a security interest where none exists would be an additional disclosure that
misleads consumers about the subject of a required disclosure

A broader construction of the statute that premised liability upon any

misleading or confusing disclosure obviously would deter creditors from
disclosing optional information. Although Regulation Z presumably addresses
the most important items of credit information, it also is obvious that
consumers benefit from additional disclosures that do not impair the quality of

required disclosures. For example, some consumers will benefit from G. Fox's
optional disclosure of the circumstances in which additional finance charges are
not assessed. Our interpretation of Sec. 36-395-5(b), (Sec. 226.6(c)), does not
cause consumers unduly to forgo the benefits of such optional disclosures and
is fully consistent with TILA's policies
10

After the argument of the appeal defense counsel advised the court that there
are additional circumstances, beyond those discussed in the opinion, in which
G. Fox does not impose additional finance charges on its customers' accounts.
We do not consider those additional circumstances in this appeal

11

Although in most of this opinion primary citation is made to Connecticut law,

this section focuses upon the federal regulations for two reasons. First, the
district judge issued his ruling under the federal regulation and did not construe
the corresponding Connecticut regulation. Second, if the federal regulation
does impose print style requirements, the Connecticut regulation, to the extent it
imposed different print style requirements, would be unenforceable. See 12
C.F.R. Sec. 226.6(b)(1)(i)

12

The 1969 pamphlet is relevant solely as an FRB staff interpretation of Sec.

226.7(c)(4), and we have not considered G. Fox's claim that it relied upon the
pamphlet in the preparation of its periodic statements

13

In Flesher v. Household Fin. Corp. of Ohio, 640 F.2d 861, 862-63 (6th
Cir.1981), the Sixth Circuit held that a creditor's disclosure of a default and
deferment charge in a loan agreement simply as ".9863," without a dollar sign,
violated TILA. The figure so stated was the only figure in the agreement not
accompanied by a dollar or percentage sign, and apparently appeared in a line
of text rather than under a column heading. Although the court did not note the
point, dollar amounts are not ordinarily stated as four figures following a
decimal point and thus the figure, standing alone, was ambiguous. The Sixth
Circuit concluded that the figure did not implicitly refer to a dollar amount, but
could be misread as referring to a percentage or some other charge. This case
does not present any danger of misinterpretation similar to that found in Flesher

14

We note that G. Fox did not merely state its minimum finance charge policy
and then, through a general disclaimer, disclaim the interest "where prohibited
by law," but that it specifically informed Connecticut consumers, through the
blank-box format and the reverse-side disclosure, that minimum finance
charges are not imposed in Connecticut

The second interpretation, though adopted elsewhere, Stewart v. Ford Motor

Credit Co., 685 F.2d 391 (11th Cir.1982); Fox v. Heilig-Meyers Co., 681 F.2d
212, 214 (4th Cir.1982) (alternative holding), is not free from doubt, see

Stewart v. Ford Motor Credit Co., supra, 685 F.2d at 395 (Clark, J., dissenting).
The statute simply says that a creditor "may supply additional information." 15
U.S.C. Sec. 1632 (1976 & Supp. V 1981). The Regulation, as it read when
plaintiffs' claim arose, was more precise. It permitted "additional information"
but specified:
none shall be stated, utilized, or placed so as to mislead or confuse the customer
... or contradict, obscure, or detract attention from the information required ... to
be disclosed.
12

C.F.R. Sec. 226.6(c), p. 588 (1982) (pre-October 1, 1982, version). As a matter

of parsing, this regulation would normally be read to accomplish two distinct
objectives: (1) banning any statement that misleads or confuses a customer and
(2) banning any statement that contradicts, obscures, or detracts attention from
a required disclosure. However, in the revised version of Regulation Z, the
Federal Reserve Board deleted former section 226.6(c) with this explanation:
The Board believes that additional information may be included on the
statement, and its use will be adequately regulated by the general requirement
that all open-end Truth in Lending disclosures be made clearly and
conspicuously.

46

Fed.Reg. 20848, 20857 (April 7, 1981). Since the "clearly and conspicuously"
standard applies only to required disclosures, 12 C.F.R. Sec. 226.6(a), p. 586
(pre-October 1, 1982, version), id. at Sec. 226.5(a), p. 835 (current version), it
is apparently the Board's view that optional information will be "adequately
regulated" simply by determining whether, in light of the optional information,
the required information remains "clearly and conspicuously" disclosed. This
suggests that the Board does not construe TILA to regulate the clarity of
optional information, except to the extent that such information might impair
understanding of a required disclosure. The Board gave no indication that it
viewed the deletion of former section 226.6(c) as a substantive change

The current versions appear at 15 U.S.C. Sec. 1637(b)(9) (Supp. V 1981) and
12 C.F.R. Sec. 226.7(j), p. 837 (1982)

The current version appears at 12 C.F.R. Secs. 226.6(a)(4) n. 13, 226.7(d) n.

14, p. 836 (1982)

The majority opinion relies on the "small-balance" non-disclosure language of

section 226.7(b)(1)(v) as support for its conclusion that the payment necessary
to avoid finance charges need not be disclosed at all. 716 F.2d at 108-110. In
the majority's view, since a creditor need not disclose that it imposed no finance
charge on balances below a certain amount, it need not disclose the amount of

any payment necessary to avoid finance charges. The conclusion does not
follow. It is true that a creditor who requires payment of only a portion of a
balance to avoid finance charges, for example, one-third of the new balance, is
forgoing interest on the remaining two-thirds. But forgoing interest on stated
fractions of a balance, regardless of amount, is not the same as forgoing interest
on all balances below a constant amount. Permission for non-disclosure of de
minimis amounts is not a basis for allowing a creditor to refuse to tell a
customer whether he must pay all or only some fraction of his bill in order to
avoid finance charges