Docket No. 89371–Agenda 18–January 2001.

VANESSA JACKSON, Appellant, v. SOUTH HOLLAND   

DODGE, INC., et al. (Chrysler Financial Corporation, Appellee).

Opinion filed July 26, 2001.

	JUSTICE THOMAS delivered the opinion of the court:

	The plaintiff, Vanessa Jackson, brought this class action

lawsuit against South Holland Dodge, Inc. (hereinafter, South

Holland Dodge or dealership), and Chrysler Financial Corporation

(Chrysler), alleging violations of the Consumer Fraud and

Deceptive Business Practices Act (Consumer Fraud Act) (815

ILCS 505/1 et seq. (West 1994)), and the Sales Finance Agency Act (205 ILCS 660/1 et seq. (West 1994)), stemming from the listing on the parties’ financing statement of a charge for the

purchase of an extended service warranty. Chrysler filed a motion

to dismiss, contending that its conduct complied with the

requirements of the federal Truth in Lending Act (TILA) (15

U.S.C. §1601 et seq. (1994)) and, therefore, under Lanier v. Associates Finance, Inc., 114 Ill. 2d 1 (1986), it could not be held liable for the state-law claims. The circuit court of Cook County

dismissed the claims against Chrysler and made its order final and

appealable pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R.

304(a)). The appellate court affirmed the dismissal of the claims

against Chrysler. 312 Ill. App. 3d 158. We allowed the plaintiff’s

petition for leave to appeal (177 Ill. 2d R. 315), and, for the

reasons that follow, we affirm the appellate court’s decision.

BACKGROUND

	The plaintiff’s amended complaint and the exhibits attached

thereto establish that on May 17, 1995, the plaintiff purchased a

1995 Dodge Stratus from South Holland Dodge. As part of the

transaction, the plaintiff purchased an extended service warranty

contract for the sum of $1,099. She also entered into a motor

vehicle retail installment contract with the dealership. The retail

installment contract completed by the dealership states that $1,099

was paid to Chrysler for the extended service contract. However,

South Holland Dodge did not actually pay all of the sum listed in

the financing statement to Chrysler. Rather, South Holland Dodge paid only a small portion of the $1,099 to Chrysler and retained the

balance of the charge. The plaintiff alleged in her amended

complaint that the manner in which the price for the extended

warranty is disclosed is deceptive and misleading because (1) the

dealership represents that the entire amount is being disbursed to

the company named, and (2) the charge is listed in the same section

of the form as nonnegotiable items such as licensing and filing fees,

leading the consumer to erroneously conclude that the cost of the

extended warranty is a nonnegotiable fee.

	South Holland Dodge subsequently assigned the retail

installment contract to Chrysler. The plaintiff alleged that Chrysler

is liable in the present case because the retail installment contract

contains the following provision, which the Federal Trade

Commission (FTC) has required sellers to include in consumer

credit contracts since 1975:

			“Any holder of this consumer credit contract is subject

to all claims and defenses which the debtor could assert

against the seller of goods or services obtained pursuant

hereto or with the proceeds hereof. Recovery hereunder

by the debtor shall not exceed amounts paid by the debtor

hereunder.” (Hereinafter, FTC Holder Notice.) 16 C.F.R.

§433.2(a) (1997).

	The plaintiff further alleged that based on Chrysler’s

“extensive experience in financing used car transactions,” Chrysler

had actual knowledge of the amounts which car dealers disbursed

to the issuers of extended warranties, and knew that the amount

represented on the retail installment contract as having been

disbursed to the issuer of the extended warranty was in fact not

disbursed. The amended complaint cited a 1990 report of the

Attorney General for the State of New York, which concluded that

in 54% of the cases, new car buyers paid in excess of the

manufacturers’ suggested retail price for service contracts,

providing the dealerships with an average markup of 76%.

	The amended complaint further alleged that before May 1995,

Chrysler knew that courts had held that allegations that car dealers

misrepresented the entire amount charged for an extended warranty

while retaining a portion of the amount charged stated a claim

under TILA (15 U.S.C. §1601 et seq. (1994)), and Regulation Z (12 C.F.R. §226 (1995)), a comprehensive set of rules enacted by

the Federal Reserve Board to implement TILA. Additionally, the

plaintiff alleged that Chrysler “acquiesced and approved of the

representations” made by dealerships because it benefitted from

them–the inflated price of the service contract meant that a greater

amount was financed by the borrower. Finally, the plaintiff alleged

that Chrysler facilitated the misrepresentations of South Holland

Dodge and other dealerships by producing and distributing the

retail installment contract forms that dealers ultimately used to

make the misrepresentations.

	Chrysler filed a motion to dismiss pursuant to section 2–615

of the Code of Civil Procedure (735 ILCS 5/2–615 (West 1998)).

Citing Lanier, Chrysler argued that because it complied with its obligations under TILA as an assignee, it could not be held liable

under Illinois law for the plaintiff’s state-law claims. Under TILA,

an assignee can be held liable only if the misrepresentation is

“apparent on the face” of the assigned document. See 15 U.S.C.

§1641(a) (1994); Taylor v. Quality Hyundai, Inc., 150 F.3d 689, 694 (7th Cir. 1998). Because any misrepresentation of the dealer in this case was not apparent on the face of the document assigned

to Chrysler, it cannot be held liable in this case. Chrysler also

argued that the plaintiff’s allegations of “actual knowledge” were

irrelevant to Chrysler’s compliance with TILA, and that the

plaintiff’s allegations lacked the required specificity to state a cause

of action.

	The trial court granted the motion and dismissed the plaintiff’s

complaint against Chrysler with prejudice. On appeal, the appellate

court affirmed, finding that Lanier applied to bar the plaintiff’s state-law claims against Chrysler and that its conclusion was

supported by the “ ‘overwhelming consensus’ ” among federal

courts that compliance with TILA was an absolute bar to liability

under the Consumer Fraud Act. 312 Ill. App. 3d at 164, citing

Franks v. Rockenbach Chevrolet Sales, Inc., No. 95–C–6266 (N.D. Ill. December 30, 1999). The appellate court then noted that

a contrary conclusion had recently been reached in Pawlikowski v. Toyota Motor Credit Corp., 309 Ill. App. 3d 550 (1999), which held that an assignee’s exemption from TILA liability was not a

defense to Consumer Fraud Act liability. The appellate court in the

present case, however, determined that the state and federal cases relied upon by Pawlikowski did not support that court’s decision. 312 Ill. App. 3d at 167.

	The appellate court further concluded that the FTC Holder

Notice could not be used to “trump” the exemption from liability

granted by the operation of TILA. 312 Ill. App. 3d at 169. The

court stated that its decision should not be interpreted as a “blanket

immunization of assignees, no matter their conduct.” 312 Ill. App.

3d at 168. Rather, an assignee would still be liable for its

preassignment fraud that was active and direct. 312 Ill. App. 3d at

168. Finally, the court stated that its decision did not conflict with Pawlikowski in the long run because the court in that case had found similar conclusory allegations in the plaintiff’s complaint to

be insufficient. The appellate court in the present case declined to

remand for more pleadings, however, finding it would not serve

any useful purpose given the barrage of similar lawsuits around the

country which indicated that the plaintiff would not be likely to

form any better factual allegations of fraud. 312 Ill. App. 3d at

169-70.

	ANALYSIS

	A motion to dismiss under section 2–615 challenges only the

legal sufficiency of the complaint and all well-pleaded facts in the

complaint are taken as true. Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 490 (1996); Anderson v. Vanden Dorpel, 172 Ill. 2d 399, 407 (1996). The question a reviewing court must determine when

considering the propriety of a section 2–615 motion to dismiss is

whether the allegations of the complaint, when interpreted in the

light most favorable to the plaintiff, are sufficient to establish a

cause of action upon which relief may be granted. Connick, 174 Ill. 2d at 490.

I. Applicability of Lanier

	The plaintiff argues that the appellate court erred in finding

that Lanier barred the state-law claims in this case. She contends that Lanier limits exemptions from liability to actions that are “specifically authorized” by TILA, and that the disclosures in this

case, rather than being authorized by TILA, violate TILA. She

claims that the appellate court incorrectly expanded Lanier when it found, in essence, that if there is no liability under TILA, then the

conduct is authorized by TILA. The plaintiff relies upon

Pawlikowski, 309 Ill. App. 3d 550, Bernhauser v. Glen Ellyn Dodge, Inc., 288 Ill. App. 3d 984 (1997), and Grimaldi v. Webb, 282 Ill. App. 3d 174 (1996), to support her position.

	In Lanier, this court considered whether compliance with TILA is a defense to liability under the Consumer Fraud Act.

There, the plaintiff instituted a class action suit against a financing

company whose loan documents provided that interest would be

computed using the Rule of 78’s if the borrower prepaid the

outstanding loan balance. The plaintiff contended that the use of

the Rule of 78’s to compute interest in loans made to

unsophisticated borrowers, absent an explanation to the borrower

about the effects of the rule upon early repayment, constituted

common law fraud and violated the Consumer Fraud Act.

	This court in Lanier noted that section 10b(1) of the Consumer Fraud Act provides that the Consumer Fraud Act does

not apply to “ ‘[a]ctions or transactions specifically authorized by

laws administered by any regulatory body or officer acting under

statutory authority of this State or the United States.’ ” Lanier, 114 Ill. 2d at 17, quoting Ill. Rev. Stat. 1981, ch. 1211⁄2, par.

270b(1) (now 815 ILCS 505/10b(1) (West 2000)). Under this

provision, conduct which is authorized by federal statutes and

regulations, such as those administered by the Federal Reserve

Board, is exempt from liability. Lanier, 114 Ill. 2d at 17.

	This court acknowledged that TILA itself did not specifically

address the type of disclosure required, but that the Federal

Reserve Board rule, Regulation Z, required “ ‘identification of the

method of computing any unearned portion of the finance charge

in the event of prepayment in full which includes precomputed

interest charges.’ ” Lanier, 114 Ill. 2d at 12, quoting 12 C.F.R. §226.8(b)(7) (1981). The staff of the Federal Reserve Board,

however, stated in an official interpretation that mere reference to

the Rule of 78’s by name is sufficient disclosure under Regulation

Z because the Rule of 78’s involves complex mathematical

formulations which cannot be accurately condensed into simple

statements. Lanier, 114 Ill. 2d at 12-13. Noting that the Federal Reserve Board’s formal interpretations are entitled to great

deference, this court held that because the defendant acted in conformity with the interpretation, the defendant did not violate

Regulation Z by failing to explain the operation of the Rule of 78’s.

Lanier, 114 Ill. 2d at 13-16.

	After concluding that the defendant did not violate TILA, this

court then considered whether compliance with TILA precludes

liability under the Illinois statute. Lanier, 114 Ill. 2d at 16. In determining that compliance with TILA does preclude liability

under the Illinois statute, the court stated the following:

		“The Consumer Fraud Act, under which plaintiff

complains, does not mandate any particular form or

subject of disclosure, but rather is a general prohibition of

fraud and misrepresentation. Because the Illinois consumer

credit statutes requiring specific disclosures are met by

compliance with the Truth in Lending Act, we believe that

the Consumer Fraud Act’s general prohibition of fraud and

misrepresentation in consumer transactions did not require

more extensive disclosure in the plaintiff’s loan agreement

than the disclosure required by the comprehensive

provisions of the Truth in Lending Act. Rather, we

perceive in the disclosure provisions of Illinois’ consumer

credit statutes a consistent policy against extending

disclosure requirements under Illinois law beyond those

mandated by the Truth in Lending Act, in situations where

both the Act and the Illinois statutes apply.” Lanier, 114 Ill. 2d at 17.

	We believe that the language quoted in Lanier applies with equal force in the present case. Chrysler, as assignee, complied

with the disclosure requirements of TILA by not violating its

obligation under the Act. We find no merit to the plaintiff’s claim

that this case is fundamentally different from Lanier simply because here the dealership, as the creditor, violated TILA, while the

creditor in Lanier did not violate TILA. The plaintiff’s argument ignores the reality that Chrysler complied with its obligations under

TILA. In fact, Chrysler’s compliance with TILA is even clearer in

this case than was the compliance of the creditor in Lanier because in Lanier the court had to resort to a staff interpretation to determine compliance, while compliance in this case can be

determined from the express language of the statute enacted by

Congress.

	The purpose of TILA is “to assure a meaningful disclosure of

credit terms.” 15 U.S.C. §1601(a) (1994). However, in enacting its

1980 amendments to section 1641(a) of TILA, Congress expressed

the additional purposes of narrowing “considerably the potential

scope of assignee liability,” to “ ‘mak[e] compliance easier for

creditors,’ ” and to limit civil liability for statutory penalties for

only significant violations. Ramadan v. Chase Manhattan Corp., 229 F.3d 194, 200 (3d Cir. 2000), citing S. Rep. No. 96–73

(1979), reprinted in 1980 U.S.C.C.A.N. 280. To achieve these goals, TILA imposes separate and distinct disclosure obligations on

creditors and assignees. TILA makes creditors, such as the

dealership in this case, primarily responsible for making the

required disclosures and ensuring that they are accurate. Creditors

commit a violation of TILA when they fail, as alleged in this case,

to disclose their retention of a portion of extended warranty

charges reported as “Amounts Paid to Others on Your Behalf.”

See Taylor, 150 F.3d at 691; see also Gibson v. Bob Watson Chevrolet–Geo, Inc., 112 F. 3d 283 (7th Cir. 1997). However, TILA limits the duty required by assignees under the Act to a review of the assigned documents themselves to determine if they

contain violations that a reasonable person can spot on the face of

those documents. 15 U.S.C. §1641(a) (1994); Taylor, 150 F.3d at 694; accord Ramadan, 229 F.3d at 197; Green v. Levis Motors, Inc., 179 F.3d 286, 295 (5th Cir. 1999); Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 709-10 (11th Cir. 1998).

	Section 1641(a) of TILA specifically addresses the liability of

creditorsassignesesse as follows:

			“Except as otherwise specifically provided in this

subchapter, any civil action for a violation of this

subchapter or proceeding *** which may be brought

against a creditor may be maintained against any assignee

of such creditor only if the violation for which such action

or proceeding is brought is apparent on the face of the disclosure statement ***. A violation apparent on the face of the disclosure statement includes but is not limited to

(1) a disclosure which can be determined to be incomplete

or inaccurate from the face of the disclosure statement or

other documents assigned, or (2) a disclosure which does not use the terms required to be used by this subchapter.”

(Emphasis added.) 15 U.S.C. §1641(a) (1994).

The plaintiff does not allege in her amended complaint that the

disclosure violation–that the dealer kept a portion of the amount

paid for the extended warranty–appears anywhere on the face of

the documents assigned to Chrysler. In such cases, various circuits

of the Ffederal Ccourt of Aappeals have consistently dismissed TILA

claims brought against assignees because the disclosures were not

apparent on the face of the assigned documents. Ramadan, 229 F.3d at 203, Green, 179 F.3d at 296; Ellis, 160 F.3d at 710; Taylor, 150 F.3d at 691.

	Those courts have also rejected allegations similar to the ones

made by the plaintiff in this case of “actual knowledge” based on

an assignee’s “experience in the field.” Ramadan, 229 F.3d at 198, Taylor, 150 F.3d at 694. For example, in Taylor, the court noted:

			“[W]e cannot agree that awareness of the practices of

some creditors can be equated to knowledge that a

particular disclosure on a particular TILA form is

inaccurate or incomplete. These are good cases in point.

Suppose that 75%, or even 90%, of all automobile dealers

in the greater Chicago area engage in the practice about

which the plaintiffs are complaining. That still does not

mean that an employee of a bank or other financial

institution could tell, simply by looking at the face of the

documents assigned, whether a particular TILA statement

before [him or] her was inaccurate or incomplete. One out

of four, or one out of ten, might be perfectly accurate. In

effect, the rule which the plaintiffs are arguing would

impose a duty of inquiry on financial institutions that serve

as assignees. Yet this is the very kind of duty that the

statute precludes, by limiting the required inquiry to

defects that can by ascertained from the face of the

documents themselves.” Taylor, 150 F.3d at 694.

	We agree with the appellate court that there is no reason why Lanier’s reach should not extend to instances where an assignee is free from liability under federal law because of the TILA

exemption in section 1641(a). As we noted in Lanier, there is a consistent policy throughout Illinois law against extending disclosure requirements beyond what is mandated by federal law. Lanier, 114 Ill. 2d at 17. If an assignee were liable under the Consumer Fraud Act, though exempt from liability under TILA, it

would impose disclosure requirements on assignees beyond those

mandated by federal law. This would frustrate the overarching

reasons put forth by Congress in enacting the assignee exemption, i.e., to narrow assignee liability, to make compliance easier for creditors, and to eliminate confusion as to the responsibilities of

assignees. See Ramadan, 229 F.3d at 200. Thus, we conclude that an assignee is not responsible for the misrepresentations made by

the dealer to the consumer outside of reviewing the face of the

assigned document for apparent defects. Accordingly, we will

follow Lanier and hold that compliance with the disclosure requirements of TILA is a defense to the Consumer Fraud Act

claim against Chrysler in this case.

	The plaintiff’s reliance on Pawlikowski is not persuasive. The cases relied upon by Pawlikowski do not support its finding that Lanier should not apply to bar liability where the assignee complied with TILA under similar facts. For example, Pawlikowski relied upon Bernhauser v. Glen Ellyn Dodge, Inc., 288 Ill. App. 3d 984 (1997). However, Bernhauser did not involve a claim against an assignee. Rather, the plaintiff in that case sued the dealership

and the manufacturer, not the finance company. Thus, the case did

not involve an issue of an assignee’s liability under the Consumer

Fraud Act where the assignee had met its obligations under section

1641(a) of TILA. In sum, we find the rationale of Pawlikowski to be flawed with respect to the application of Lanier.

	Additionally, we note that Pawlikowski ultimately concluded that the allegations in the plaintiff’s complaint were insufficient to

state a cause of action under the Consumer Fraud Act or for

common law fraud or civil conspiracy. Pawlikowski, 309 Ill. App. 3d at 563-65. The allegations found insufficient in Pawlikowski were very similar to those made by the plaintiff in the present case.

Specifically, the plaintiff in Pawlikowski alleged that the assignee “ ‘participated in a scheme and therefore conspired with

dealerships to *** exact monies in amounts in excess of’ the actual

costs of the warranties,” that the assignee “was aware of the

misleading disclosures, and that [the assignee] produced and

distributed the retail installment contracts ‘that enable [the dealer] *** to make the misrepresentations’ to the plaintiff.” Pawlikowski, 309 Ill. App. 3d at ___564. Thus, the instant appellate court correctly

noted that Pawlikowski did not conflict with its view that such allegations are insufficient to state a cause of action.

	We also find the plaintiff’s reliance upon Grimaldi v. Webb, 282 Ill. App. 3d 174 (1996), to be unpersuasive. There, the plaintiff

sued the dealership and the assignee of the financing statement,

claiming that the dealer misrepresented the amount of the extended

warranty purchased by the plaintiff. The appellate court rejected

the dealership’s claim that its conduct was authorized by TILA, finding instead that the dealership’s conduct may have actually

violated TILA. Grimaldi, 282 Ill. App. 3d at 181. The appellate court then noted that the circuit court never reached the issue of

the assignee’s liability for the dealership’s conduct under the

Consumer Fraud Act because it found that the plaintiff failed to

state a claim against the dealership. Therefore, the appellate court

continued, the issue of the assignee’s liability was not properly

before it on review. Grimaldi, 282 Ill. App. 3d at 183. Given that Grimaldi does not address the liability of assignees or our holding in Lanier, we fail to see the relevance of that case to the plaintiff’s claim that Lanier should not apply here.

	We also agree with the appellate court that application of

Lanier to this case does not confer a blanket immunization of assignees from liability under the Consumer Fraud Act. A plaintiff

would be entitled to maintain a cause of action under the Consumer

Fraud Act where the assignee’s fraud is active and direct.

Preassignment fraud would be independent of and separate from

the TILA assignee exemption and would thus be actionable under

Illinois law. For example, if a plaintiff could allege specific facts

showing that the assignee met with the car dealer and concocted a

scheme to put false statements on the financing statement, an

assignee would not be exempt from a state fraud action from a

duped buyer.

	In opposing a motion for dismissal under section 2–615 of the

Code of Civil Procedure, a plaintiff cannot rely simply on mere

conclusions of law or fact unsupported by specific factual

allegations. Anderson, 172 Ill. 2d at 408. Illinois is, moreover, a fact-pleading jurisdiction, and a plaintiff must allege facts sufficient to bring his or her claim within the cause of action asserted.

Anderson, 172 Ill. 2d at 408.

	In the present case, there are no specific factual allegations

that, prior to the assignment of the financing statement, Chrysler

directly participated in a scheme with the dealership to

misrepresent facts to the plaintiff. Instead, the plaintiff’s conclusory

allegations of “actual knowledge” are at best nothing more than a

claim that Chrysler knowingly received the benefits of another’s

fraud. We have previously held that the Consumer Fraud Act does

not provide a cause of action against those who knowingly receive

the benefits from the person committing a violation of the Act.

Zekman v. Direct American Marketers, Inc., 182 Ill. 2d 359, 370 (1998).

	Here, the closest the plaintiff came to alleging specific factual

allegations to support its conclusory allegations was its claim that

Chrysler supplies the blank forms that the dealerships later fill out

with a misrepresentation as to the allocation of the extended

warranty charge. However, the blank forms themselves do not

contain a misrepresentation, and there was nothing inherently

deceptive about those forms. As the appellate court correctly

noted, “[t]he forms did not promote the deceptive practice of the

dealers–no more than the Internal Revenue sService could be said

to promote fraud when it supplies blank forms to tax cheaters.”

312 Ill. App. 3d at 169.

II. FTC Holder Notice

	The plaintiff argues that Chrysler assumed liability through the

FTC Holder Notice contained in the contract. As previously noted,

the FTC Holder Notice contained in the contract provides for

assignee liability with respect to all claims and defenses which the

debtor could assert against the seller. In view of this provision, the

plaintiff maintains that the installment contract should be enforced

against the assignee as written as a matter of state contract law.

	We disagree. In the context of federal TILA claims, the federal

courts that have considered the same argument have unanimously

rejected it. This is because (1) the FTC language is required by

FTC regulation, and is therefore not the subject of bargaining

between the parties, and (2) its reach has been modified by subsequent Ccongressional statutory amendment. In that regard, we

note that the FTC Holder Notice language is required to be placed

in all consumer installment contracts by an FTC regulation adopted

in 1975. 16 C.F.R. § 433.2(a) (1997); Taylor, 150 F. 3d at 692. The language is a legally required part of every consumer financing

contract right down to the required font size. See 16 C.F.R.

§433.2(a) (1997). As the Taylor court observed, “[t]he Holder Notice, even though contained within the contract, was not the

subject of bargaining between the parties, and indeed could not

have been. It is part of the contract by force of law, and it must be

read in light of other laws that modify its reach.” Taylor, 150 F. 3d at 693. The Taylor court noted that in 1980 Congress specifically amended section 1641(a) of TILA to limit assignee liability. Thus,

the unmistakable effect of the 1980 amendment is to trump the

FTC’s holder notice. Taylor, 150 F. 3d at 692-93.

	Adherence to the principle that the Holder Notice must be

read in light of section 1641(a)’s limitation on assignee liability,

does not render the contract language meaningless. Ellis, 160 F. 3d at 708. The FTC provision requiring the Holder Notice continues

to fill a valuable role by confirming the right of buyers to withhold

payment from sellers or assignees, if it becomes apparent that the

car purchased is a lemon. Ellis, 160 F. 3d at 709.

	The plaintiff cites section 1610(d) of TILA (15 U.S.C.

1610(d) (19954))), which provides that “[e]xcept as specified in

sections 1635, 1640, and 1666e of this title, this subchapter and the

regulations issued thereunder do not affect the validity or

enforceability of any contract or obligation under State or Federal

law.” Based on the language of section 1610(d), she argues that

section 1641(a) should not be read to modify the reach of the FTC

Holder Notice in the contract.

	Essentially the same argument was rejected by the Court of

Appeals, Fifth Circuit, in Green v. Levis Motors, Inc., 179 F. 3d 286 (5th Cir. 1999). There, the court noted that the FTC’s

regulation did not neatly complement the limitation on assignee

liability in section 1641(a). The court concluded, however, that to

read section 1610(d) in the way suggested by the plaintiff would

produce an absurd result: the protections of §section 1641(a) would

never have any effect on consumer credit contracts. Green, 179 F. 3d at 296. We find the same rationale to be applicable here. Accordingly, we reject the plaintiff’s contract-based effort to side-

step section 1641(a) of TILA.

	The plaintiff’s argument relying on the FTC Holder Notice

must be rejected for the additional reason that it conflicts with the

official FTC commentary on the subject. When the FTC adopted

its Holder Notice requirement, it published an official commentary

explaining that the Holder Notice could be used as a shield against

claims by assignees, but that it only permits affirmative actions

against assignees where the seller’s breach is so substantial that

rescission is warranted. The official commentary reads as follows:

		“This rule is directed at the preservation of consumer

claims and defenses [which] means that a consumer can

(1) defend a creditor’s suit for payment of an obligation by

raising a valid claim against the seller as a setoff, and (2)

maintain an affirmative action against a creditor who has

received payments for a return of monies paid on account.

The latter alternative will only be available where a seller’s

breach is so substantial that a court is persuaded that

rescission and restitution are justified. The most typical

example of such a case would involve non-delivery, where

delivery was scheduled after the date payments to a

creditor commenced.” 40 Fed. Reg. 53,505, 53,524

(1975).

	The plaintiff does not argue that the alleged disclosure

violation in the present case would warrant rescission of the

underlying contract. Instead, she attempts to contradict the official

commentary by relying on an informal FTC staff opinion letter

which asserts that there are no limitations on the assignee’s liability

under the required FTC Holder Notice. We note, however, that

this document was not submitted to the circuit court and is not

properly a part of the record on appeal. Thus, it cannot be

considered by this court. Kazubowski v. Kazubowski, 45 Ill. 2d 405, 415 (1970). At any rate, the letter acknowledges that it is an

informal staff opinion letter, not binding on the FTC. We, then, do

not find it persuasive authority to override the official commentary,

indicating that the plaintiff may not use the Holder Notice as an

affirmative weapon against the assignee under the present

circumstances.

III. Sales Finance Agency Act Claim

	The plaintiff next argues that the appellate court erred in

affirming the trial court’s dismissal of the plaintiff’s Sales Finance

Agency Act claim. She notes that the Sales Finance Agency Act

contains an “actual knowledge” standard of liability. See 205 ILCS

660./8.5 (West 1994). She points out that TILA’s disclosure

requirements “do not annul, alter, or affect the laws of any State

relating to the disclosure of information in connection with credit

transactions, except to the extent that those laws are inconsistent

with the provisions of this subchapter and then only to the extent

of the inconsistency.” See 15 U.S.C. §16010(a)(1) (19954). She then

asserts that the “apparent on the face standard” of section 1641(a)

of TILA, does not preempt the “actual knowledge” standard.

	Initially, we note the plaintiff does not make an argument that

the disclosure requirements of TILA and the standard set forth in

the Sales Finance Agency Act are consistent. Section 16010(a)(1)

provides that the provisions of TILA preempt state law to the

extent that the state law is inconsistent with those provisions. 15

U.S.C. §16010(a)(1) (19954); 12 C.F.R. §226.28(a)(1) (1995). As

previously stated, the language of section 1641(a) of TILA sets

forth a single, clear standard, which provides that in order for an

assignee of a loan to be held liable for a disclosure violation, the

violation must be “apparent on the face” of the disclosure

statement. Thus, a good argument could be made that an “actual

knowledge” standard places an additional burden on assignees in

conflict with TILA, which would therefore preempt the application

of the state law. However, we need not decide this question

because we find that the plaintiff’s complaint fails to state a cause

of action under the Sales Finance Agency Act.

	Section 8.5 of the Sales Finance Agency Act provides that a

violation of the Act occurs with the “[p]urchase of any retail

contract *** after actual knowledge that the contract *** violates

this Act *** or the Motor Vehicle Retail Installment Sales Act.”

205 ILCS 660./8.5 (West 1994). The plaintiff’s amended complaint

alleges that Chrysler’s conduct violated the Motor Vehicle Retail

Installment Sales Act. (815 ILCS 375/1 et seq. (West 1994)). Unlike the strict disclosure requirements of TILA, however, the

Motor Vehicle Retail Installment Sales Act requires, in relevant

part, only that the contract disclose “clearly, conspicuously and in a meaningful sequence” the following items: “[a]ll other charges,

individually itemized, which are included in the amount financed

but which are not a part of the finance charge.” 815 ILCS 375/5(4)

(West 1994). Here, the $1,099 charge for the extended warranty

was clearly disclosed in the contract. That the dealer was retaining

a portion of the amount disclosed was not a required disclosure

and nothing in the Motor Vehicle Retail Installment Sales Act

requires any further detail. Accordingly, the plaintiff’s allegation

that Chrysler had “actual knowledge,” based on its “experience,”

that the full amount of the warranty was not disbursed to the issuer,

failed to state a claim upon which relief could be granted under the

Sales Finance Agency Act.

	Lastly, the plaintiff requests in her reply brief that she be given

an opportunity to replead her complaint. However, the plaintiff

failed to suggest in her appeal briefs any factual allegations or

proposed amendments which might cure the defects in her

amended complaint. At oral argument, the plaintiff suggested that

she could allege that Chrysler had a motivation to sell “other

Chrysler products” and that Chrysler conducts a “heavy review” of

the dealership contracts. We do not believe, however, that such

allegations would bring her claim within the scope of the causes of

action being asserted. See Anderson, 172 Ill. 2d at 408-11.

CONCLUSION

	For the reasons stated, we hold that section 1641(a) precludes

assignee liability under the Consumer Fraud Act in this case. We

further hold that the plaintiff failed to state a cause of action under

either the Sales Finance Agency Act or the Motor Vehicle Retail

Installment Sales Act. Accordingly, we affirm the judgment of the

appellate court.

Affirmed.

	JUSTICE KILBRIDE, specially concurring:

	I agree with the majority’s determination that the plaintiff in

this case did not sufficiently plead a cause of action under the

Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act or Act) (815 ILCS 505/1 et seq. (West 1994)) against the assignee of the contract, Chrysler Financial Corporation

(Chrysler). I therefore concur in the result. I believe, however, that

the majority has unnecessarily relied upon our holding in Lanier when the resolution of this case is dictated solely by the language

of section 1641 of the Truth in Lending Act (TILA) (15 U.S.C.

§1641 (1994)).

	Unlike the case at hand, Lanier involved a suit against a creditor directly, as opposed to an assignee, and whether the fact

that the creditor engaged in conduct specifically authorized by TILA was a defense to liability under the Consumer Fraud Act.

The loan agreement in Lanier referred to “the Rule of 78’s” to explain the method of calculating the creditor’s accrued interest if

the borrower prepaid the outstanding balance. The creditor

provided no further explanation of the functioning of the Rule of

78’s. After prepaying the loan amount, plaintiff filed suit under the

Consumer Fraud Act, partially alleging that the lender’s failure to

explain the mathematical operation of the Rule of 78’s constituted

a deceptive business practice under the Consumer Fraud Act. The

lender responded that simple reference to the Rule of 78’s method

was a sufficient disclosure under TILA, according to the Federal

Reserve Board, and compliance with TILA should preclude liability

under the Consumer Fraud Act.

	In holding that specific compliance with TILA precluded

liability under the Consumer Fraud Act, this court noted that

section 10b(1) of the Act provides that it does not apply to

“ ‘[a]ctions or transactions specifically authorized by laws administered by any regulatory body or officer acting under

statutory authority of this State or the United States.’ ” (Emphasis

added.) Lanier, 114 Ill. 2d at 17, quoting Ill. Rev. Stat. 1981, ch. 1211⁄2, par. 270b(1) (now 815 ILCS 505/10b(1) (West 2000)). The

method of disclosure for the Rule of 78’s used by the creditor in

Lanier was specifically authorized by the Federal Reserve Board. I therefore agree with plaintiff that Lanier plainly limited exemptions from liability to conduct that is directly prescribed by required by

TILA as opposed to conduct that does not violate TILA. I also

agree with plaintiff that the appellate court (and now this court) has

vastly extended our holding in Lanier by finding that if there is no technical violation of TILA, then the conduct is specifically authorized by TILA. This interpretation dramatically expands the Lanier holding and leaves ajar a door of escape for creditors who are being sued directly by borrowers. Simply put, under the

majority’s holding in this case, if a creditor is able to show that it

has not engaged in conduct violative of TILA, there may not be a

remedy for a plaintiff for an unfair or deceptive business practice

under the Consumer Fraud Act. Under the Lanier holding, a creditor had to be affirmatively complying with a mandate of TILA

in order to be so exempted from liability under the Act, and I

believe that is the only viable rule.

	In my view, the Pawlikowski court arrived at the appropriate conclusion with regard to assignees by, in effect, simply relying on

the plain language of section 1641. Under that section, an action

may be brought against an assignee “ ‘only if the violation *** is

apparent on the face of the disclosure statement.’ ” Pawlikowski, 309 Ill. App. 3d at 558, quoting 15 U.S.C. §1641(a) (1994). Thus,

unless there is such a patent violation, or unless the plaintiff can

show active and direct, preassignment fraud on the part of the

assignee, then there is no viable cause of action for the plaintiff

against the assignee. In such cases as in the case at hand, a court

need not move beyond these two specific avenues of inquiry.

	For these reasons, I concur only in the result arrived at by the

majority and I do not endorse the reasoning employed to reach that

result.

	ChHIEF JUSTICE  HARRISON joins in this special

concurrence.