Truth in Lending: 6.6.6.3.2 Charges that are part of the plan
Regulation Z lists the following categories as charges that are part of the plan:1146
Regulation Z lists the following categories as charges that are part of the plan:1146
Regulation Z lists the following categories as charges that are not imposed as part of an open-end plan:1153
There are special rules for fees and charges imposed on the asset feature of a hybrid prepaid-credit card1157 and whether such fees are considered “part of the plan.” A fee imposed on the asset feature of the card is considered part of the plan if exceeds a comparable fee on a prepaid account that does not have a credit feature, but only to the extent of the amount of the fee that exceeds the comparable fee.1158 Such amounts for such fees must be disclosed at least outside of the account-ope
The disclosure of charges that are part of the plan must include the amount of the charge or how the amount will be determined, and the circumstances in which they may be imposed.1166 A creditor may, for example, state that it will determine the amount of the finance charge by applying a periodic rate of 1.5% per month to the average daily balance. This information should be clear enough to enable the consumer to verify the creditor’s figures.
The account-opening disclosures must contain a statement of when finance charges begin to accrue,1195 which generally involves disclosure of the grace period.1196 The creditor does not need to use any particular phrase or term, but its language must be sufficiently similar to the grace period disclosures within the application/solicitation1197 and account-opening tables1198 in order to satisfy
The creditor must include a more detailed explanation of the balance computation method in the account agreement or other account-opening disclosures.1216 This explanation must be more detailed than the just the name of the method used in the application/solicitation and account-opening tables.1217 The model form found at appendix G-11218 of Regulation Z gives an example: “We figure the finance charge on your account by applying the periodic
Creditors are required to disclose the amount of available credit in the account-opening table if the fees for the issuance or availability of credit, along with any security deposit, charged to the account exceed 15% of the account’s credit line.1223 If the threshold is met, the issuer must disclose the available credit remaining after these fees or security deposit are debited to the account.1224 Furthermore, the Credit CARD Act substantively limits the amount of fees that can be charged t
If there is or may be a security interest, as defined in Regulation Z,1237 in connection with the account, the creditor must disclose this fact.1238 This disclosure is not included in the account-opening table, but in the account agreement or other disclosures.1239 This disclosure, like the rest of the account opening disclosures,1240 can be given at the same time the consumer receives the car
The account agreement or account-opening disclosures must include certain disclosures about voluntary credit insurance, debt cancellation, or debt suspension products.1272 These disclosures are necessary if the creditor wishes to exclude credit insurance from the finance charge, as they include disclosures as to the voluntary nature of the credit insurance and its unit cost basis.1273 The consumer must also sign or initial the insurance request after receiving the disclosure.
The consumer is entitled to actual and statutory damages for any violation of the account-opening disclosure requirements.1277 The last paragraph of TILA’s civil liability provision, section 1640(a), specifically states that statutory damages are available for violations of section 1637(a).1278 As with any TILA litigation around disclosures, practitioners in federal court must be mindful to show that a violation of the account-opening disclosure requirements caused a concrete injury to the c
For all forms of open-end credit, once the customer has taken advantage of the credit offered, the creditor is required to send periodic statements.1280 Where both a creditor and an agent for the creditor exist, each may send a statement which reflects the customer’s obligation to that creditor.1281
The periodic statement must be sent to the customer at the end of each billing cycle if either a finance charge has been imposed during the cycle, or if there is an outstanding debit or credit balance of more than $1 at the end of the cycle.1282 If there is no amount owing, no statement need be sent.1283
The periodic statement must be mailed or delivered to the consumer1304 unless the consumer opts to pick it up.1305 The federal E-Sign Act allows electronic delivery if the consumer and the creditor have gone through its consent and confirmation-of-consent requirements.1306 The CFPB has expressed concerns about electronic delivery of periodic statements, particularly the possibility that consumers might not “open” these statements and thus wou
Periodic statements for credit cards and other forms of non-home-secured open-end credit are required to disclose the following:1311
Regulation Z imposes a number of formatting requirements on periodic statements. Interest charges and fees must be grouped together.1333 The payment due date must be disclosed on the front of the first page of the periodic statement, together with any late-payment fee and penalty rate for late payment in close proximity.1334 The ending balance and minimum payment warning must be disclosed “closely proximate” to the minimum payment.
For hybrid prepaid-credit cards,1337 issuers must provide written periodic statements with respect to the credit feature that meet the requirements of Regulation Z.1338 For the asset feature of such cards, issuers need only comply with Regulation E’s requirements.1339 Issuers may, however, combine the information about the credit feature and about the asset feature on one periodic statement, which must comply with both Regulation Z and Regula
The Credit CARD Act specifically mandates that the periodic statement be mailed or delivered twenty-one days before the due date.1343 The Credit CARD Technical Corrections Act of 2009 limited this requirement to only credit cards under an open-end (not home-secured) consumer credit plan.1344 However, for all other open-end credit plans, the creditor must mail or deliver the periodic statement at least fourteen days before the due date.1345
The due date for purposes of the twenty-one-day requirement is the same due date required to be disclosed under Regulation Z § 1026.7(b)(11).1349 Some creditors will provide a “courtesy period” of a few days after the formal due date, during which the creditor will not impose a late fee if the payment is received by then.
If the issuer fails to provide this twenty-one-day period, it is prohibited from treating any payment as late for any purpose.1357 Regulation Z modifies this prohibition to apply to only those payments received within twenty-one days after the mailing or delivery of the periodic statement.1358 Thus, if the issuer fails to provide twenty-one days but the payment is received forty-five days after the mailing of the statement, the issuer is permitted to treat the payment as late.
Regulation Z implements this provision by requiring creditors to have “reasonable procedures” designed to ensure that periodic statements are mailed or delivered twenty-one days prior to the payment due date and end of the grace period.1362 Thus, a lender is not required to determine the specific date on which a statement is mailed or delivered; rather, the lender will comply with the rule if it has adopted “reasonable procedures.”1363