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U.S. Supreme Court

Mourning v. Family Publications Svc., Inc., 411 U.S. 356 (1973)

Mourning v. Family Publications Service, Inc.

No. 71-829

Argued November 9, 1972

Decided April 24, 1973

411 U.S. 356


Petitioner, who contracted to purchase magazine subscriptions from respondent, brought this action in District Court, alleging that respondent had failed to comply with the disclosure provisions of the Truth in Lending Act, as implemented by Federal Reserve Board "Regulation Z." The District Court found that respondent had failed to comply with Regulation Z, in that respondent had extended credit to petitioner, payable in more than four installments, without making the disclosures required by the Act. The Court of Appeals reversed, holding that the Board had exceeded its statutory authority in issuing Regulation Z, since the regulation required disclosure in some credit transactions in which a finance charge had not been made, and, alternatively, that the regulation violated due process by creating a conclusive presumption that credit payments made in more than four installments included a finance charge.


1. The "Four Installment Rule" of Regulation Z is a valid exercise of the Federal Reserve Board's rulemaking authority under the Truth in Lending Act. Pp. 411 U. S. 363-375.

(a) Congress, which was well aware that merchants could evade the disclosure requirements of the Act by concealing credit charges, gave the Board broad rulemaking power to prevent such evasion, and, in the exercise of that power, the Board issued the challenged rule to deal with the practice of concealing finance charges in the cash price of merchandise sold. Pp. 411 U. S. 363-369.

(b) No conflict arises from the fact that the Act mentions disclosure only in regard to transactions in which a finance charge is imposed, while the disclosure requirements of the rule sometimes apply where no such charge exists, since Congress did not attempt to specify all types of situations under which the Board's regulations might apply, and the deterrent effect of the rule clearly implements the objectives of the Act. Pp. 411 U. S. 372-373.

(c) The Board had authority to promulgate a general rule to

Page 411 U. S. 357

prevent circumvention, even if the rule embraces some transactions that the provisions of the Act might not, on their face, reach. Village of Euclid v. Ambler Realty Co., 272 U. S. 365. Pp. 411 U. S. 373-374.

(d) Existence of penalty provisions in the Act does not require a narrow construction of the Act's nonpenalty provisions. FCC v. American Broadcasting Co., 347 U. S. 284, distinguished. Pp. 374-375.

2. Imposition, pursuant to § 130 of the Act, of a minimum penalty of $100 in cases such as this where the finance charge is nonexistent or undetermined, but where disclosure has not been made, is a permissible sanction. P. 411 U. S. 376.

3. In imposing a disclosure requirement on all members of a defined class to discourage evasion by a substantial portion of that class, the challenged regulation does not create a conclusive presumption violative of the Fifth Amendment. Pp. 411 U. S. 376-377.

449 F.2d 235, reversed and remanded.

BURGER, C.J.,delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, and BLACKMUN, JJ., joined. DOUGLAS, J., filed an opinion dissenting in part, in which STEWART and REHNQUIST, JJ., joined, post, p. 411 U. S. 378. POWELL, J., filed a dissenting opinion, post, p. 411 U. S. 383.

Page 411 U. S. 358

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