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Villasenor v. American Signature

March 31, 2008


The opinion of the court was delivered by: Judge Virginia M. Kendall


Plaintiff Jose Villasenor ("Villasenor") filed an original and Amended Complaint against American Signature, Inc. d/b/a Value City Furniture ("VCF"), World Financial Network National Bank (the "Bank") and Alliance Data Systems Corporation ("ADS"), bringing claims under the Truth in Lending Act ("TILA") and Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA") as well as claims of unjust enrichment and breach of contract and a claim for a declaratory judgment under the Illinois Retail Installment Sales Act. Each of Villasenor's claims related to an allegedly deceptive and misleading sales promotion called the "Real Deal." Villasenor alleges that Defendants affirmatively misrepresented that they were offering interest-free financing on furniture purchases until 2011 and then surreptitiously switched consumers to financing arrangements involving the payment of interest. The Bank, ADS and VCF filed Motions to Dismiss the Amended Complaint, and this Court sustained only Villasenor's claim for statutory damages under the TILA.

Villasenor filed a Second Amended Complaint containing only two counts: (1) the original surviving TILA claim for statutory damages and (2) a claim for alleged violations of the ICFA. The Defendants moved again to dismiss Villasenor's claims under the Illinois Consumer Fraud Act. For the reasons stated below, this Court grants the Motions to Dismiss.


In the fall of 2006, Villasenor visited a VCF store located at 8310 S. Cicero Avenue in Burbank, Illinois after he observed a sign in the window of that store advertising "no interest 'til 2011." (2d Am. Compl. ¶ 16.) The sign advertised a program that VCF called the "Real Deal;" a program widely promoted by VCF and designed and implemented jointly by Defendants. Id. at ¶17. Similar signs were placed conspicuously in all other VCF stores. Id. at ¶18. He purchased a dinette set, a loveseat, two tables, a bedroom set, and a TV cart. Id. at ¶19. Villasenor opened a private label VCF credit card account and charged his purchase to a VCF credit card account that he opened. Id.

Both ADS and the Bank assist VCF in providing private label credit cards to VCF customers. Id. at ¶11. The cards are branded with VCF's name and logo and can be used only at VCF or affiliated stores. Id. VCF acts as the agent of the Bank with respect to the private label credit card program - it invites consumers to apply for credit and takes applications for the cards on behalf of the Bank. Id. at ¶¶14-15. VCF also delivers required disclosures related to the cards on behalf of the Bank. Id. at ¶15. ADS provides VCF with certain services related to the cards, including account acquisition and activation, receivables funding, card authorization, card issuance, statement generation, remittance processing, customer service functions, and marketing services. Id. at ¶12.

The credit card agreement for Villasenor's VCF credit card account provided that:

If a promotional Credit Plan is offered at the time you open your credit card account, this Agreement will include information about the terms for the [promotional] Plan (which may include . . . the ANNUAL PERCENTAGE RATE . . .) by use of an insert, attachment, or other written information provided as part of or with this Agreement.

Id. at ¶24.

VCF provided Villasenor with an "insert, attachment, or other written information" regarding the Real Deal promotion in the form of a glossy red, white and black booklet. Id. at ¶25. The Booklet provided, in pertinent part, that:

No interest charges apply on promotional credit plan purchases if the balance is paid in full before the promotional period ends (20, 30, 40, 50, or 60 months from the date of purchase, depending upon the plan you enrolled in). If the promotional credit-plan is not paid in full before the promotional period ends, the remaining balance plus interest will be included in your regular revolving balance and regular credit terms apply.

Id. at¶29. When Villasenor purchased the furniture, VCF provided him with a cash register receipt indicating the terms of his purchase were "50 month plan / no interest." Id. at ¶30. The receipt also provided a "supplemental disclosure" that stated:

The Real Deal offers customers a choice of paying for merchandise in one of several ways: (1) cash/check/bank charge/3 or 5 month payment plan ("Cash Plan"); (2) twenty month payment plane ("20 Month plan"); (3) thirty month payment plan ("30 Month Plan"); (4) forty month payment plan ("40 Month Plan"); (5) fifty month payment plan ("50 Month Plan"); and (6) sixty month payment plan ("60 Month Plan")

Customers who select the 50 Month Plan will pay a price that is $704.64 greater than the price paid by customers who select the Cash Plan. This difference is a FINANCE CHARGE. The ANNUAL PERCENTAGE RATE ...

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