Tuesday, August 6, 2013

Target Credit Card Accounts in Texas Court (now owned by TD Bank)

UPDATE: Target National Bank does not exist any more. It was closed and liquidated  March 13, 2013. Its portfolio of credit card accounts was acquired by TD BANK.


This may sound like a silly question, but the fine print on the customer agreement will likely prove otherwise.

Credit card debt suits involving Target cards come in several varieties, with different entities as plaintiffs. Even when Target sues as original creditor, it is not Target Corporation that's doing it. The credit operations are run through an affiliated bank. While lawsuits have typically been brought by Target National Bank ("Target NB"), sometimes a closer look at the documentation will reveal that the cardmember agreement offered as a summary judgment exhibit (or at trial) identifies the card issuer as Retailers National Bank even though the title of the document makes reference to Target. The attorney for Target NA often does not come forth with proof that the two are one and the same, or that the entity named as the Plaintiff is the successor in interest of Retailers National Bank. Arguably, this constitutes a gap in the chain of ownership or raises a fact issue as to the identity of the original creditor. In addition to litigation brought by Target National Bank itself, debt suits on Target cards are also filed by TD Bank USA, N.A. as successor. The latter's home state is Delaware.


Many debt collection suits on Target credit card accounts are brought by a law firm with the unwieldy name RAUSCH, STURM, ISRAEL, ENERSON & HORNIK, LLC ("RSIEH"). The name was even too long to be deemed suitable for a domain name. The debt collection firm's web address thus uses the acronym: www.rsieh.com.

RSIEH has as many as nine Texas-licensed attorneys listed below the signature line on its filings. It represents both Target National Bank and TB Bank USA, N.A. (and other creditors, such as CITIBANK, N.A.). When it sues for TB Bank, its summary judgment evidence typically includes a copy of the ASSIGNMENT AND ASSUMPTION AGREEMENT that governs the transfer of accounts. That agreement lists three Target entities as involved parties: TARGET CORPORATION as the Parent and Depositor, TARGET RECEIVABLES, LLC as a Seller, and TARGET NATIONAL BANK, as a Seller and Depositee.

RSIEH typically does not seek attorney's fees in addition to the amount of the debt and costs of suit (filing fees and cost of service of process).


Target credit card agreements are typically much shorter than other such form contracts (often only 2 pages with 3 columns each). They also differ from those of most other major card issuers in that they do not contain arbitration clauses, meaning that arbitrability is not an issue and cannot be invoked as a defense to litigation. The form agreements do, however, contain a choice of law clause stating that the agreement is governed by federal and South Dakota law.

A number of credit card issuers chose South Dakota as the relevant jurisdiction for regulatory reasons. Interest rates are not capped by usury laws in that state as long as whatever rate is charged is contractually authorized. Citibank is another major credit card issuer that located its credit card arm CITIBANK (SOUTH DAKOTA), N.A., there.

Copies of Target card agreements offered as summary judgments contain contract verbiage in fine print and are not always legible.

Target cards typically have variable interest rates for two types of balances: Purchases and Cash Advances. The APRs are shown as variable with the letter V in parenthesis. The late fee is $35.00 and a warning about this fee as a consequence of not making timely payments appears on monthly billing statements.


In litigated cases, the account documentation submitted by Target (or on its behalf) typically reveals a key difference. Target routinely accelerates the maturity of the revolving balance on the last statement sent to the card holder. As a result, the amount shown as the minimum required payment on the last account statement ("Minimum Payment Due") matches the amount of the outstanding debt, i.e. the revolving balance. Therefore motions for summary judgment by Target containing such a final statement cannot be fought on the ground that the account documentation does not show that the amount sued for was actually due for payment in full. At best, it could be argued that contractual authorization to exercise the acceleration remedy has not been shown (if either the card agreement itself is not in the record or if there is insufficient proof of the Defendant's liability under the version attached as a summary judgment exhibit).

Unlike some other creditor (e.g. Discover Bank, Citibank) Target does not use a servicer entity to process payments. The billing statements issued for customers in Texas include payment coupons with an address for TARGET NATIONAL BANK either in Minneapolis, Minnesota or in Dallas, TX. The billing statements identify Target National Bank as an affiliate of Target Stores and requires checks to be made payable to Target National Bank.

Related topics: Cases involving Target accounts in Texas Court of Appeals

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