In the

United States Court of Appeals

For the Seventh Circuit

No. 99-2666

Derrick D. Smith and Valerie D. Smith,

Plaintiffs-Appellants,

v.

Check-N-Go of Illinois, Inc., et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 99 C 1958--Harry D. Leinenweber, Judge.

No. 99-2667

Sandra Brown and Deborah Jackson,

Plaintiffs-Appellants,

v.

Check-N-Go of Illinois, Inc.,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 99 C 2073--Harry D. Leinenweber, Judge.

Argued November 9, 1999--Decided December 23, 1999

 Before Bauer, Easterbrook, and Kanne, Circuit Judges.

 Easterbrook, Circuit Judge. We have for

consideration two of the many payday-loan cases

now pending in this court./* A "payday loan" is

a short-term loan that is to be repaid on the

borrower’s next payday. The transaction is

handled with a minimum of paperwork; the loan

agreement is a single sheet of paper, and the

borrower receives cash within minutes of

applying. The rate of interest is high (in the

range of 500% annually), and the lender typically

requires the borrower to write a check that can
be submitted for payment after the borrower’s

next scheduled payday. We held in Smith v. Cash

Store Management, Inc., No. 99-2472 (7th Cir.

Oct. 27, 1999), that a lender does not violate

the Truth in Lending Act, 15 U.S.C. sec.sec.

1601-77, or its implementing regulations, by

referring to the post-dated check as "security."

We also concluded that a receipt stapled to the

front of the loan agreement, and obscuring some

of its terms, might violate the requirement that

all disclosures be made "clearly and

conspicuously". 15 U.S.C. sec.1632(a); 12 C.F.R.

sec.226.17(a)(1). (Congress has authorized the

Federal Reserve to make regulations with the

force of law. 15 U.S.C. sec.1604(a).) The two

appeals consolidated for treatment here present

a third question: whether a circle drawn by hand

around the due date violates the rule that the

finance charge and annual percentage rate be

"more conspicuous than any other disclosure,

except the creditor’s identity". 12 C.F.R.

sec.226.17(a)(2).

 Section 226.17(a) provides (footnotes omitted):

 (1) The creditor shall make the

 disclosures required by this subpart

 clearly and conspicuously in writing, in a

 form that the consumer may keep. The

 disclosures shall be grouped together,

 shall be segregated from everything else,

 and shall not contain any information not

 directly related to the disclosures

 required under sec.226.18. The itemization

 of the amount financed under

 sec.226.18(c)(1) must be separate from the

 other disclosures under that section.

 (2) The terms finance charge and annual

 percentage rate, when required to be

 disclosed under sec.226.18(d) and (e)

 together with a corresponding amount or

 percentage rate, shall be more conspicuous

 than any other disclosure, except the

 creditor’s identity under sec.226.18(a).

The appendix to this opinion reproduces the front

side of the loan agreement signed by plaintiff

Derrick Smith. The area immediately below "Our

Disclosure to You," which the parties call the

"federal box," groups the mandatory disclosures,

complying with the segregation requirement in

sec.226.17(a)(1). The borders around the annual

percentage rate and finance charge sections are

thicker than those around the amount financed and

total of payments; the phrases "annual percentage

rate" and "finance charge" are in boldface, while

"amount financed" and "total of payments" are

not. Check-N-Go, the principal defendant,

contends that as a matter of law this treatment
satisfies the requirement that the finance charge

and annual percentage rate be "more conspicuous

than any other disclosure". The finance charge

and annual percentage rate need not be the most

prominent words on the page; they need only be

the most conspicuous of the "disclosures." The

most eye-catching parts of this form are the

caption "Consumer Loan Agreement", the footer

"COPY NON-NEGOTIABLE", and the line "NOTICE:

SEE ADDITIONAL TERMS ON THE REVERSE SIDE OF THIS NOTICE".

Plaintiffs do not contend that the emphasis on

these phrases violates the regulation, which

makes us wonder what is really at stake if

borrowers’ attention properly may be diverted

from the finance charge and annual percentage

rate. Still, plaintiffs say that the due date is

a required disclosure and that the hand-drawn

circle makes it "more conspicuous" than the

boldface boxes and type used for the finance

charge and annual percentage rate. Concluding

otherwise, the district judge dismissed the

complaints under Fed. R. Civ. P. 12(b)(6) for

failure to state a claim on which relief may be

granted.

 For reasons elaborated in Walker v. National

Recovery, Inc., No. 99-2119 (7th Cir. Dec. 21,

1999), Rule 12(b)(6) does not authorize

dismissal. An allegation that a particular

disclosure is "more conspicuous" than the finance

charge or annual percentage rate states a claim

on which relief may be granted. The possibility

that the allegation is false--even that

attachments to the complaint demonstrate its

falsity--does not mean that the complaint fails

to state a claim. Instead the attachments

authorize the district court to grant judgment on

the pleadings under Rule 12(c), or to convert the

motion to dismiss into a motion for summary

judgment and to grant that relief (a possibility

raised by Rule 12(b) itself). Neither step is

appropriate if there are material factual

disputes, but "conspicuousness" for purposes of

sec.226.17(a)(2) is a matter of law rather than

fact, so decision on the papers was proper, even

though the district judge cited the wrong rule.

 Cash Store Management holds that whether

particular disclosures are "clear" is an issue of

fact, for the extent to which one piece of paper

obscures another varies, and clarity depends on

what a particular borrower would observe.

Similarly, Walker holds that whether a particular

form of words confuses an unsophisticated person

(the standard under the Fair Debt Collection

Practices Act) is a question of fact, because

confusion is in the eye (or mind) of the

beholder. What is clear to a lawyer or logician

may bewilder a less sophisticated person. See

also Johnson v. Revenue Management Corp., 169
F.3d 1057 (7th Cir. 1999). But the legal standard

under the Truth in Lending Act is the objective

"reasonable person" approach, see Cash Store

Management, slip op. 4-5. More to the point,

sec.226.17(a)(2) has nothing to do with

borrowers’ comprehension. What is "more

conspicuous than any other disclosure" depends on

the contents of the form, not on how it affects

any particular reader. See Herrera v. First

Northern Savings & Loan Ass’n, 805 F.2d 896, 900

(10th Cir. 1986), and Dixey v. Idaho First

National Bank, 677 F.2d 749 (9th Cir. 1982), both

of which treat compliance with sec.226.17(a)(2)

as a legal rather than factual matter.

 Let us assume, as plaintiffs contend, that

handwritten (or hand-drawn) portions of the form

are especially "conspicuous" to some borrowers.

Others may find the person-specific terms in a

typeface different from the rest of the form

especially eye-catching--and then every loan

agreement would violate the Act, because lenders

put details such as dates, rates, and amounts

into blank spaces. Many eyes may be most drawn to

boldface type, while to other borrowers italic

type may take precedence. Is 14-point italic more

or less "conspicuous" than 16-point bold, or

boxed 14-point large and small capitals? Perhaps

another contingent responds to the difference

between sans-serif type and type with serifs. The

preprinted parts of defendant’s forms are in

proportionally spaced sans-serif type in the

Helvetica family, but the details added to

complete the transaction are in a monospaced

serif face from the Courier family of type. Some

readers may think that statements in the middle

of the page are most prominent; other eyes may

gravitate to the top or bottom. Yet the premise

of the statute and regulations is that one size

fits all; a form complies or it doesn’t, and the

fact that some or even many of the recipients are

abnormal in their perception of "conspicuousness"

does not affect the form’s validity. Thus the

inquiry must be objective, which makes the

question legal rather than factual.

 If we were to treat the determination of

conspicuousness as a matter of "fact," then the

regulation would fail in its purpose. No matter

what a lender did, a borrower could say that to

his eyes the combination of color, typeface,

spacing, size, style, underlining,

capitalization, border, and placement made one

feature of the agreement stand out relative to

the mandatory disclosures, or emphasized one

disclosure over another. Forget the hand-drawn

circle for a moment. The finance charge and

annual percentage rate are in the middle of the

page, in boldface, sans-serif type enclosed by

vertical rectangles. The due date, printed in a
monospaced serif face, is in a larger box with a

horizontal orientation a little lower on the

page. Do these differences themselves violate the

Truth in Lending Act? If plaintiffs are right,

then lenders can’t know the answer until after a

trial--and if Lender A prevails in one trial,

Lender B with an identical form could lose the

next (or Lender A could lose to the next

borrower). Uncertainty would redound to

borrowers’ detriment, for in competition lenders

must recover their costs, and an unavoidable cost

created by legal dubiety would be passed on to

borrowers in the form of higher interest rates.

The Federal Reserve has included many sample

forms in its regulations, but if the effect of

typeface and type placement is open to

factfinding, then even the model forms are not

safe.

 Form H-2, in 12 C.F.R. Part 226 App. H, is

similar to the contract Check-N-Go used. The

model form has some additional boxes and blanks

to fill in, and lenders (like auto rental

companies and other users of forms) likely try to

direct borrowers’ attention to these options with

hand-drawn Xs and circles so that borrowers can

make the necessary choices. (For example, Form H2 has a yes-or-no pair of checkboxes so that the

borrower may elect to receive or forego an

itemization of the amount financed.) Neither the

checkboxes nor lenders’ attempts to draw

consumers’ attention to them detract from the

conspicuous placement, border, and typeface of

the mandatory disclosures. Borrowers who care

about the finance charge and annual percentage

rate could locate them in a trice. Section

226.17(a)(2) requires the lender to emphasize the

finance charge rather than the amount financed,

the annual percentage rate rather than the amount

the borrower receives. A reminder to the borrower

that other choices must be made does not imperil

this preference. Likewise with a circle around

the due date. The principal disclosures still

stand out, and the relative visibility of the

financial terms is unchanged.

 When a lender employs the model form

recommended by the Federal Reserve, an isolated

circle or mark cannot create liability. Although

the Federal Reserve could forbid any alterations

of the form, it has not done so; the extensive

regulations do not hint that the hand-drawn

checkmarks, Xs, and circles so commonly added to

preprinted forms in the process of signing must

be extirpated. Perhaps a determined effort to

embellish the form, as by using a yellow marker

to highlight figures other than the annual

percentage rate and finance charge, would make

the highlighted figures "more conspicuous"

despite the bolder type and boxes for the
disclosures the Federal Reserve wants emphasized.

But a single circle around the due date--the

piece of information most vital to the consumer

once the loan has been made, for failure to repay

on time can lead to penalties--does not turn a

model form into a violation of law.

Affirmed

/* In addition to the two cases listed in the

caption, the list includes two already decided by

the court and eight more pending. Smith v. Cash

Store Management, Inc., No. 99-2472 (7th Cir.

Oct. 27, 1999), and Smith v. Fast Cash Advance,

Inc., No. 99-2673 (7th Cir. Nov. 3, 1999)

(unpublished order), are the decided cases. The

others are Smith v. Americash Inc., No. 99-2936;

Jackson v. Americash Loans, LLC, No. 99-3365;

Jackson v. American Loan Co., No. 99-2596; Terry

v. Payday Loan Corp. of Illinois, No. 99-3652;

Laws v. Payday Loan Corp. of Illinois, No.

99-3625; Mitchem v. Payday Check Advance, Inc.,

No. 99-3353; Brown v. Payday Check Advance, Inc.,

No. 99-3110; and Hahn v. McKenzie Check Advance

of Illinois, LLC, No. 99-3346. All of these cases

were filed by a single law firm, on behalf of a

stable of clients most of whom have filed or

joined multiple suits. For reasons that we have

been unable to discover, the Northern District of

Illinois, in which these suits were filed, did

not consolidate them before a single judge, even

though the issues and parties have substantial

overlap. Our court can do better. From now on,

all appeals concerning payday loans will be

handled by this panel, see Operating Procedure

6(b), and we will issue orders in each of the

other eight pending appeals seeking the parties’

views on the question whether these appeals

should be decided summarily on the authority of

Smith v. Cash Store Management and this opinion.

APPENDIX