Predatory Lending Indicators: Legal Action for Truth in Lending Act Discrepancies

 

Civil remedies for failure to comply with Truth in Lending Act requirements: Action may be brought in any U.S. district court or in any other competent court within one year from the date on which the violation occurred. This limitation does not apply when Truth in Lending Act violations are asserted as a defense, set-off, or counterclaim, except as otherwise provided by state law.

Private remedies – applicable to violations of provisions regarding credit transactions, credit billing, and consumer leases.

  • Actual damages in all cases.
  • Attorneys’ fees and court costs for successful enforcement and rescission actions.
  • Statutory damages.
  • For individual actions, double the correctly calculated finance charge but not less than $100 or more than $1,000 for individual actions.
  • For class actions, an amount allowed by the court with no required minimum recovery per class member to a maximum of $500,000 or 1% of the creditor’s net worth, whichever is less.
  • Can be imposed on creditors who fail to comply with specified Truth in Lending Act disclosure requirements, with the right of rescission, with the provisions concerning credit cards, or with the fair credit billing requirements.

Enforcement by administrative agencies: The enforcement scheme for banks includes the Federal Reserve System, the Federal Deposit Insurance Corporation, and other agencies. The enforcement agency responsible for creditors not subject to the authority of any specific enforcement agency is the Federal Trade Commission. Nine separate agencies currently have enforcement responsibilities.

Enforcement agencies can: Issue cease and desist orders or hold hearings pursuant to which creditors are required to adjust debtors’ accounts to ensure that the debtor is not required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. If the FTC determines in a cease and desist proceeding against a particular individual or firm that a given practice is “unfair or deceptive,” it may proceed against any other individual or firm for knowingly engaging in the forbidden practice, even if that entity was not involved in the previous proceeding.

Criminal penalties – Willful and knowing violations of Truth in Lending Act permit imposition of a fine of $5,000, imprisonment for up to one year, or both.