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Repossessions: 14.2.9.5.1 When lease entered into prior to active duty military service

The Servicemembers Civil Relief Act gives a servicemember the option of terminating a vehicle lease without penalty upon entering active duty.214 This right applies if, after executing the lease, the lessee then enters active duty under a call or order for 180 days or more.215 Such a termination of a lease also terminates the obligations of a servicemember’s dependent under the lease.216

Repossessions: 14.2.9.5.2 When lease entered into while on active duty military service

A servicemember has the right to cancel without penalty a vehicle lease executed during a period of active duty if the lessee receives military orders requiring a permanent change of station outside the continental United States or to deploy with a military unit for 180 days or more.223 The continental United States is defined as the forty-eight contiguous states and the District of Columbia.224 The servicemember then has the same right to terminate the lease without penalty as if t

Repossessions: 14.2.9.6 Limits on Consumer Liability After Vehicle Loss

When a vehicle is stolen or seriously damaged in a wreck, insurance will pay the vehicle’s value to the lessor. To many consumers’ surprise, the lessor may still seek an early termination charge from the consumer. From the lessor’s point of view, the lease has been terminated early, the realized value is the insurance payment, and the consumer is liable for an early termination charge as computed under the lease’s early termination formula.

Repossessions: 14.2.10.1 UCC Article 2A

Section 2A-528 specifies a formula for computing the lessor’s default remedies.236 UCC § 2A-504(1) allows the lessor instead to use an early termination formula that is “reasonable in light of the then anticipated harm caused by the default or other act or omission.”237 UCC § 2A-504(2) specifies that if the early termination charge does not meet this reasonability standard, than the lessor’s sole remedy is as provided in section 2A-528.

Repossessions: 14.2.10.2 Federal Consumer Leasing Act

An unreasonable early termination or default charge violates the federal Consumer Leasing Act (CLA) in two different ways. The CLA requires disclosure of reasonable early termination and default charges.246 If the lessor discloses an unreasonable early termination or default charge, that is a disclosure violation, leading to CLA statutory and actual damages and attorney fees.

The CLA also has a substantive provision prohibiting unreasonable early termination and default charges:

Unfair and Deceptive Acts and Practices: 2.2.11.1 Introduction

This section analyzes the geographical scope of state UDAP statutes. A first question is whether the statute applies to residents of other states. A second question is whether the statute applies to transactions that occur in whole or in part in a different state. These questions are often intertwined, as transactions with out-of-state consumers often occur in whole or in part in another state.

Unfair and Deceptive Acts and Practices: 13.2.6.3 Scope Issues

State attorneys general and state regulators may enforce the UDAAP standard or a UDAAP rule against any “covered person”86 as long as the entity that is “State-chartered, incorporated, licensed, or otherwise authorized to do business under State law.”87 The state attorney general—but not a state regulator—can also sue a national bank or federal savings association, but only if it violates a CFPB-issued UDAAP rule.

Unfair and Deceptive Acts and Practices: 13.3.3 Standards of Review for Compulsory Process

The fundamental standards courts utilize in determining the propriety of a civil investigation demand or subpoena are whether “the inquiry is within the authority of the agency, the demand is not too indefinite, and the information sought is reasonably relevant.”103 These standards, articulated by the Supreme Court under the Fourth Amendment’s prohibition of unreasonable searches and seizures,104 should be construed liberally in favor of the government because of the remedial purposes of UDAP le

Unfair and Deceptive Acts and Practices: 13.3.4.1 Due Process

Courts consistently uphold subpoenas and CIDs against due process challenges.139 Procedural due process is satisfied where there is specific notice of documents to be produced and a meaningful opportunity to be heard.140 Court review of the state’s subpoena is sufficient protection against unconstitutional searches.141 While a subpoena ordering production of records “forthwith” without sufficient opportunity to consult counsel may deny the responde

Unfair and Deceptive Acts and Practices: 13.3.4.2 Self-Incrimination

A respondent’s constitutional protection against self-incrimination is a legitimate ground for resisting a subpoena in some circumstances. However, to invoke the Fifth Amendment the defendant cannot simply refuse to respond to the subpoena, but must appear and then object to specific document requests.146

Unfair and Deceptive Acts and Practices: 13.3.5.1 Reasonable or Probable Cause

In a number of states, enforcement officials must have “reasonable cause” or “probable cause” to believe the UDAP statute has been violated before they can issue a CID or subpoena.

As a general rule, the state need not have reasonable or probable cause unless there is an express requirement in the authorizing statute.165 Nevertheless, some state courts do read a reasonable cause requirement into the UDAP legislation.166

Unfair and Deceptive Acts and Practices: 13.3.6 Defects on the Face of a Subpoena

State enforcement officials should be careful in drafting CIDs and subpoenas to make sure that the compulsory process fulfills all statutory requirements. Litigious respondents will scrutinize the process hoping to find a technical defect. While it is good practice not to give respondents grounds for objecting to the form of the subpoena, courts will usually enforce compulsory process even if there are complaints as to form.

Unfair and Deceptive Acts and Practices: 13.3.10 Test Purchases, Visits

An important investigative technique is for an enforcement agency investigator to pose as a consumer and witness the seller’s practices. Common examples are taking a pre-inspected automobile or appliance to a repair shop, or shopping at a supermarket to determine if goods are available and sold at advertised sale prices.

Unfair and Deceptive Acts and Practices: 13.3.11 Access to FTC Investigational Records

The FTC Act specifies the limitations on the Commission’s authority to release investigatory documents to state attorneys general. The FTC Act also sets requirements concerning use of such documents by state attorneys general that contain trade secrets or other confidential information.

Section 6(f) of the FTC Act (15 U.S.C. § 46(f)), as amended, states: