In the

United States Court of Appeals

For the Seventh Circuit

No. 00-1024

Mercedes Hoffman,

Plaintiff-Appellant,

v.

Grossinger Motor Corporation,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern

Division.

No. 96 C 5362--William J. Hibbler, Judge.

Argued May 30, 2000--Decided June 20, 2000

 Before Posner, Chief Judge, and Coffey and

Kanne, Circuit Judges.

 Posner, Chief Judge. The district court

granted summary judgment for the

defendant, an auto dealer sued for

violating the Truth in Lending Act by

failing to disclose a finance charge that

it levies on "subprime" purchasers of its

used cars. A subprime purchaser is a

purchaser whose credit rating is so poor

that he, or in this case she, can obtain

credit only from or through finance

companies that specialize in high-risk

borrowers. One of these finance

companies, the one that financed the

plaintiff’s purchase of a used car from

the defendant, charges the defendant a

flat $400 per car financed, called a

"holdback." The plaintiff contends that

the defendant passes this charge on to

its subprime customers but does not treat

it as a finance charge in computing the

annual percentage rate of interest that

it discloses to them. In a standard

holdback, the money held back is returned

to the dealer if and when the purchaser

pays off the loan. The parties do not

discuss this wrinkle and for simplicity

we’ll assume the finance company never

returns the money; nothing turns on the

point. The dealer uses other finance

companies that charge a different

holdback, but, again for the sake of
simplicity, we’ll ignore that

complication as well--which is in any

event irrelevant to this plaintiff--and

pretend that the holdback is always $400;

actually, the average holdback paid by

this dealer exceeds $700.

 Were it true that the dealer tacked $400

(or some fraction thereof) onto the price

of the cars it sold subprime purchasers,

and did not tack the same amount onto the

prices charged its other purchasers, the

addition would indeed be a finance charge

and the dealer would have to include it

in computing the annual percentage rate

of interest charged this class of credit

customers. Walker v. Wallace Auto Sales,

Inc., 155 F.3d 927 (7th Cir. 1998). But

as long as the dealer raises the price to

all its purchasers by the same amount to

absorb this cost, so that the customer

cannot avoid it by paying cash, it is not

a finance charge within the meaning of

the Truth in Lending Act. The Act’s

purpose is to enable consumers to decide

whether or from whom to obtain credit,

and a charge that does not affect the

cost of one form of credit relative to

another or to cash is irrelevant to that

purpose. Balderos v. City Chevrolet, No.

98-1944, 2000 WL 681010, at *1-2 (7th

Cir. May 26, 2000).

 The present case is intermediate between

the two hypothetical variants that we

have given. The defendant does not add a

$400 charge to the price of cars sold its

subprime customers, but there is evidence

that it charges them a higher price on

average than it charges its other

customers, and the difference, the

plaintiff argues, is a hidden finance

charge. There is no reported appellate

case quite like this. Balderos and

Walker, on which the plaintiff relies,

came to us in a critically different

procedural posture. The complaint in each

case alleged as in this one that the

defendant added a finance charge to its

credit sales and not to its cash sales,

but in each case the district court

dismissed the suit for failure to state a

claim and so we were required to assume

that the allegation was true. Here, by

moving for summary judgment, the

defendant forced the plaintiff to present

evidence that this dealer really did

include a secret finance charge in the

sales price to its credit customers

(actually a subset of those customers)
but not in the price to its other

customers. The plaintiff couldn’t just

stand on her complaint.

 The dealer prices its used cars as

follows. (It also sells new cars, but the

plaintiff makes no argument regarding

their pricing.) It takes the cash value

of the car, either the trade-in value or

the price the car would command at an

auction, and adds the cost of any repairs

the dealer has made. To the sum of these

two items--we’ll call that sum the

dealer’s "cost of car"--the dealer adds a

uniform markup of $5,700. The sum of the

cost of car and the markup is the

dealer’s list price for the used car. The

dealer’s salesmen are not expected to

sell most, perhaps any, cars at list

price; that price is just the beginning

of the negotiation. The salesman tries to

get as much as he can, of course, but his

commission is a percentage not of the

sales price but of the defendant’s net

profit on the sale. The net profit is the

actual sales price (which must be

approved by the defendant’s business

office) minus not only what we’re calling

the "cost of car" but also $700,

representing an allocation of the

dealer’s overhead, and, in the case of

subprime purchasers, the "holdback"--in

this case the $400 that the finance

company charged the dealer for financing

the plaintiff’s purchase.

 This method of computing the salesman’s

commissions implies that for him to get

the identical commission on two otherwise

identical cars, one sold to a subprime

purchaser and the other to a prime or

cash purchaser, the price to the subprime

purchaser would have to be $400 higher

than the price to the other purchaser.

Otherwise the dealer’s net profit would

be less on the car sold to the subprime

purchaser and so the salesman’s

commission would also be less. It does

not follow, however, as the plaintiff

seems to believe, that the price to the

subprime purchaser would be $400 higher,

or for that matter one penny higher. The

salesman will try in every negotiation to

strike the hardest bargain he can,

whether or not there is a holdback. The

plaintiff paid $8,800 for the car she

bought from the defendant. Since she was

willing to pay that much, it would have

been irrational to charge her less if it

were discovered that she wasn’t a
subprime purchaser after all. The only

significance of such a discovery would be

to reveal that the sale at $8,800 was

more profitable than the dealer had

thought and that the salesman was

entitled to a higher commission.

 This example shows how unlikely it is

that the holdback is passed on to

subprime purchasers. If there were no

holdbacks at all, the defendant’s cost of

doing business would be lower, and

conceivably this would induce it to

reduce the $5,700 markup or to permit its

salesmen to negotiate somewhat lower sale

prices, since generally the lower a

company’s costs the lower its profitmaximizing price (even if it’s a

monopolist, which there is no reason to

think this dealer is). But there is no

reason to suppose that subprime

purchasers would be particular

beneficiaries. The defendant would still

be trying to get as close to its list

prices as it could with all its

purchasers.

 The only situation in which the $400

holdback would be demonstrably a hidden

finance charge would be where the

defendant would have sold the car to a

cash purchaser for less than $400 over

the defendant’s cost of car. Suppose that

cost were $2,000. It would make no sense

for the defendant to sell to a subprime

purchaser for less than $2,400, because

in that event the defendant would net

less than $2,000 and it could get more by

auctioning the car or trading it in for

another car, thus avoiding the $400 cost

that the finance company charges it for

financing a sale to a subprime purchaser.

(We’re ignoring repair costs in this

example.) Yet the dealer might sell the

same car to a hard-bargaining nonsubprime

purchaser for between $2,000 and $2,400,

if it didn’t think it could get more than

$2,400 from anyone else. For a sale at

any price between these figures would

cover the cost of making the sale, a cost

that, in the case of a sale not to a

subprime purchaser, does not include a

$400 charge by the finance company. The

$700 in overhead costs that the defendant

allocates to every sale is incurred

whether or not a car is sold, and so it

is not saved, as the holdback is, by

refusing to sell the car at a price that

does not cover that cost. See Autotrol

Corp. v. Continental Water Systems Corp.,
918 F.2d 689, 692-93 (7th Cir. 1990).

That is why it does not figure in our

example of the minimum price that the

dealer would charge to a subprime

purchaser and to another purchaser,

respectively.

 This case is unlike the example, as is

obvious from the price that the plaintiff

paid. That price included a markup

greatly in excess of $400--the dealer’s

net profit on the sale to her was

$2,599.15. There is no evidence of a sale

by the defendant to anyone at a markup

below $400. The plaintiff did present

evidence that, on average, subprime

purchasers pay higher prices than the

dealer’s other purchasers, after

correction for differences in the cost of

car. But there is no evidence that the

higher price reflects an effort by

thedefendant to stick such purchasers

with a $400 finance charge. We have seen

that such a policy would be irrational

except in the case of a very low (below

$400) markup, of which there is no

evidence.

 Further undermining the plaintiff’s

theory of liability is the fact that the

record reveals that prime credit

purchasers from the defendant pay, on

average, higher prices--before the cost

of credit is computed--than cash

purchasers, even though there is no

holdback in the case of prime credit

purchasers. Although the dealer’s average

markup (net of the overhead allocation)

on holdback transactions is $1,800 and on

cash transactions only $900, its average

markup on credit transactions in which

there is no holdback is $1,300. The

implication is that cash customers are

more credible or savvy bargainers than

credit customers, and that credit

customers with good credit ratings are

more credible or savvy bargainers than

credit customers with bad credit ratings

(that is, the subprime purchasers). The

record is consistent with this

conjecture; the plaintiff accepted the

price offered by the defendant’s

salesman, with no attempt to bargain him

down, as she very well might have done

since the markup to her (which, net of

overhead, was approximately $3,000) was

more than twice the dealer’s average

markup for nonsubprime credit customers

and more than three times its average

markup for cash customers. There is no
evidence that she paid $400 more, or for

that matter one cent more, than she would

have paid had she not been a subprime

purchaser--no evidence, in short, that a

finance charge was "buried" in the cash

price of the car. That kills her case.

See Walker v. Wallace Auto Sales, Inc.,

supra, 155 F.3d at 933-34 and n. 9.

 Courts in other contexts, notably

antitrust enforcement, have been

reluctant to get into issues of "passing

on." E.g., Illinois Brick Co. v.

Illinois, 431 U.S. 720 (1977). Such

issues tend to be intractable to the

methods of litigation. It is possible

though unlikely that holdbacks influence

the pricing of the defendant’s cars to

subprime purchasers, but to explore the

possibility would enormously complicate

the litigation of Truth in Lending Act

claims, would cast a large cloud of

potential liability over used-car dealers

and other firms that use list prices as

just the starting point for negotiation,

and by doing so would make the class

action a truly fearsome instrument of

consumer-finance litigation. This case

began as a class action; the consumerfinance class action is the specialty of

the law firm representing the plaintiff.

 This is not a case in which a charge

that is really a finance charge is called

something else. It is a case in which the

plaintiff seeks to track a cost incurred

by the dealer into the prices charged the

dealer’s customers. The plaintiff has, as

we have seen, failed to do that. Her

failure suggests the futility of a

"passing on" theory of liability under

the Truth in Lending Act.

 The complaint charges that the

defendant’s failure to figure the

holdback into the annual percentage rate

of interest also violated the Illinois

Consumer Fraud Act, 815 ILCS 505/2. That

charge was rightly dismissed too, because

compliance with the disclosure

requirements in the federal Truth in

Lending Act is a defense under the

Illinois act. See Lanier v. Associates

Finance, Inc., 499 N.E.2d 440, 447 (Ill.

1986).

Affirmed.