1 In 1998, 67.5 percent of Americans had a credit card, and 54.7

percent had account balances after paying their most recent bills.

See U.S. Census Bureau, U.S. Dep’t of Commerce, Statistical

Abstract of the United States 728, tbl. 1166 (2002). Among those

having a balance, the medium amount of debt totaled $1,900, and

over a quarter of Americans (26.9 percent) “hardly ever pay off the

(continued...)

In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 02-4186 & 02-4189

NATHAN NEFF and ROBERT ROBB,

Plaintiffs-Appellants,

v.

CAPITAL ACQUISITIONS & MANAGEMENT COMPANY

and CAPITAL ONE, F.S.B.,

Defendants-Appellees.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

Nos. 02 C 4434 & 02 C 5829—James F. Holderman, Judge.

____________

ARGUED SEPTEMBER 12, 2003—DECIDED DECEMBER 15, 2003

____________

Before BAUER, KANNE, and EVANS, Circuit Judges.

EVANS, Circuit Judge. In 1990, Citibank issued a credit

card to Nathan Neff, who fell behind on his account.1

 Like
2 Nos. 02-4186 & 02-4189

1 (...continued)

balance.” Id. The government estimates that in 2000 there was

$683 billion of outstanding credit card debt. Id., tbl. 1165.

2 In 2002, card companies sold $46.29 billion worth of delinquent

card portfolios, up 25 percent from 2001. Ellen Kelleher, “Debt

Collectors Prosper on Bad Loan Bargains,” Financial Times

(London), Sept. 12, 2003.

many credit card accounts, moreover, his was sold2 as

delinquent to Capital One, one of the defendants in this

case. In 1997, while Capital One held the account, a collection agency, Northland Group, sent Neff a letter stating

that his balance was $1,330 but that he could settle up by

paying $536. Neff says he paid that amount with a money

order marked “payment in full.”

Over the next 5 years, Neff assumed that his Citibank

debt was satisfied. He received no monthly statements, or

for that matter any correspondence at all, which would have

alerted him to the fact that someone thought his account

remained open and that it was accumulating interest at a

staggering rate. In 2002, Neff received a letter from Capital

Acquisitions & Management Company (CAMCO), an entity

that purchased his account from Capital One, claiming that

he now owed $2,835.32, most for interest accumulated over

the years.

Like Neff, Robert Robb opened his mail one day and

learned that CAMCO said he owed money on a credit card

account he thought had been settled long ago. In 1990, a

company called “First Card” issued Robb a credit card. Robb

fell behind on payments and First Card sold the account as

delinquent to Capital One. Robb claims that the account

was settled and that he heard nothing until 2002, when he

received a letter from CAMCO notifying him that it had

purchased his account and that he owed almost $7,000, the

majority for accumulated interest. Like Neff, Robb never
Nos. 02-4186 & 02-4189 3

3 After dismissing the federal claims, the court declined to exercise supplemental jurisdiction over the state claim.

received monthly statements or correspondence of any sort

that would have put him on notice that he had outstanding

debt which was accumulating interest at a high rate.

We do not know what has become of the claims by Capital

One and CAMCO that Neff and Robb still owe money on

their old credit card accounts with Citibank and First Card.

If, as Neff and Robb allege, the accounts were settled long

ago, we can only assume that the claims against them have

dried up. But in these cases, it is Neff and Robb who take

the offensive, alleging that Capital One and CAMCO

violated the Truth in Lending Act, 15 U.S.C. § 1601 et seq.

(TILA), the Fair Debt Collection Practices Act, 15 U.S.C.

§ 1692 et seq. (FDCPA), and the Illinois Consumer Fraud

Act when they attempted to impose and collect interest on

revolving credit accounts without sending monthly statements to them.

The district court court dismissed their complaints of

federal violations on a Rule 12(b)(6) motion,3

 and we review

its order de novo on Neff and Robb’s appeal.

Understandably, both Neff and Robb were surprised when

they received letters from CAMCO telling them they owed

money on credit card charges going back almost 10 years.

Not only did they (if their story is accurate) assume that

they owed no money on the accounts, but they were surely

shocked to be told that they also owed an enormous amount

of interest. While we are sympathetic to Neff’s and Robb’s

situation, the district court was correct in granting Capital

One and CAMCO’s motion to dismiss.

Under TILA, only “creditors” are required to send consumers monthly billing statements. 15 U.S.C. § 1637(b).
4 Nos. 02-4186 & 02-4189

4 Congress delegated to the Federal Reserve Board the task of

carrying out TILA, see 15 U.S.C. § 1604(a). The Board’s interpretation of both TILA and Regulation Z, including the official commentary, is entitled to great deference. See Hardison v. General

Fin. Corp., 738 F.2d 893, 895 (7th Cir. 1984).

Neff and Robb argue that Capital One and CAMCO became

credit card issuers, and thus creditors under the purview of

TILA, when they purchased the open accounts. See 15

U.S.C. § 1602(f) (defining creditor as any person who issued

an open-ended credit card). To meet this definition, however, Capital One and CAMCO must have either “issued a

credit card” or been the issuer’s “agent.” 15 U.S.C.

§ 1602(n). Neither defendant meets either requirement.

To begin, neither one issued Neff or Robb a “credit card,”

something that is able to access a line of credit. Official

staff commentary to Regulation Z, 12 C.F.R. pt. 226,

Supp. 1 at ¶ 2(a)(15)-2.4 Neither CAMCO nor Capital One

granted Neff and Robb the right to “incur debt” or to “defer

payment of debt.” 15 U.S.C. § 1602(e); American Express Co.

v. Koerner, 452 U.S. 233, 240-41 (1981). Neff and Robb

could not go to the store and make a purchase on Capital

One or CAMCO credit. In fact, the defendants granted Neff

and Robb no credit privileges at all. Because neither Capital

One nor CAMCO issued Neff or Robb a “credit card,” they

are not “card issuers” under the Act.

Nor can Capital One and CAMCO be considered “agents”

of “card issuers.” 15 U.S.C. § 1602(n). To become an agent,

there must be an agreement that “the cardholder may use

a line of credit with the financial institution to pay obligations incurred by use of the credit card.” 12 C.F.R., pt. 226,

Supp. I, ¶ 2(a)(7). As explained above, Neff and Robb had no

credit privileges with Capital One or CAMCO. No contractual relationship existed, moreover, between the original
Nos. 02-4186 & 02-4189 5

card issuers, Citibank and First Card, and the defendants.

All Citibank and First Card did was sell Robb’s and Neff’s

accounts. That is not sufficient to deem Capital One and

CAMCO the agents of Citibank and First Card.

Since we conclude that neither Capital One nor CAMCO

are creditors under TILA, Neff’s and Robb’s reliance on the

rule for when “creditors” are permitted to stop sending

statements is misplaced. See 12 C.F.R. § 226.5(b)(2)(i); 12

C.F.R. pt. 22d, Supp. I, ¶ 5(b)(2)(i)-2. These regulations

apply only to “creditors,” and thus, as discussed above, the

defendants had no obligation to send such statements in the

first place. See Lilly v. Internal Revenue Serv., 76 F.3d 568,

571 (4th Cir. 1996) (“If a statute defines a term in its

definitional section, then that definition controls the meaning of the term whenever it appears in the statute.”).

Furthermore, because TILA and Regulation Z specifically address the circumstances of an assignee’s obligations

under the Act, we do not look to the “normal rule” that an

assignee assumes the duties of the assigning party. See,

e.g., Plumb v. Fluid Pump Serv., Inc., 124 F.3d 849, 864

(7th Cir. 1997) (“[e]lementary contract law provides that

upon a valid and unqualified assignment the assignee

stands in the shoes of the assignor and assumes the same

rights, title and interest possessed by the assignor.” (internal citation omitted)). Where Congress and the Federal

Reserve wished to impose requirements on assignees or

subsequent holders, they did so explicitly. See, e.g., 15

U.S.C. § 1641 (liability of assignees under the Act); 12

C.F.R. pt. 226, Supp. I, ¶ 20-1 (holding that a creditor “or

subsequent holder” is required to provide certain disclosures under § 226.19 of the Act, relating to residential

mortgage and variable-rate transactions). Neither Congress

nor the Federal Reserve made the policy choice here to

extend the duty to send monthly statements to purchasers

of delinquent accounts, and it is not our role to read such a
6 Nos. 02-4186 & 02-4189

5 For purposes of comparison, the FDCPA, which has a different

definition of “creditor,” is relevant. Under the FDCPA, a “creditor”

is any person who “offers or extends credit creating a debt or to

whom a debt is owed . . . .” 15 U.S.C. § 1692a(4) (emphasis added);

Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir.

2003). Under this definition, Neff and Robb would have a more

compelling argument that Capital One and CAMCO are “creditors.” Significantly, Congress thus knew how to write a broader

definition of “creditor”, yet chose not to do so in TILA.

requirement into the statute. Cf., Aubert v. American Gen.

Fin. Inc., 137 F.3d 976, 979 (7th Cir. 1998) (“When Congress wished to add . . . an exclusion from the [FDCPA’s]

coverage, it is apparent that it knew how to do so.”).5

Neff’s FDCPA claim fares no better. He argues that when

Capital One sold his debt to CAMCO, the sale resulted in

further collection action against him, when the debt should

have been reflected as satisfied, in violation of the FDCPA.

That Act, however, applies only to debt collectors, Pettit v.

Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057,

1059 (7th Cir. 2000), and only when their conduct is

undertaken “in connection with the collection of any debt.”

15 U.S.C. § 1629e. See also 15 U.S.C. § 1629f (“[a] debt

collector may not use unfair or unconscionable means to

collect or attempt to collect any debt.”). Capital One was not

a debt collector when it sold Neff’s account to CAMCO. 15

U.S.C. § 1692a(6) (defining a “debt collector” as any person

who “regularly collects or attempts to collect, directly or

indirectly, debts owed or due or asserted to be owed or due

another.”). In selling its asset, Capital One did not directly

or indirectly attempt to collect Neff’s debt. From the

moment it sold Neff’s account, it was irrelevant to Capital

One whether Neff’s account was collected or not. Capital

One retained no ownership interest in Neff’s debt and

CAMCO was not acting as its collection agency. Thus, on
Nos. 02-4186 & 02-4189 7

just a facial reading of the statute, Capital One was not a

debt collector.

Once the TILA and FDCPA claims were properly dismissed, the district court did not abuse its discretion in declining to exercise supplemental jurisdiction over the state

claims. See, e.g., O’Grady v. Village of Libertyville, 304 F.3d

719, 725 (7th Cir. 2002).

For the foregoing reasons, the judgment of the district

court is AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—12-15-03