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Truth in Lending: 12.2.4.7 Selected Scenarios Where Courts Address Tolling TILA’s Limitations Periods

While it is not difficult to categorize the legal doctrines that excuse the late filing of a complaint, it is impossible to provide a comprehensive or definitive list of facts that trigger those doctrines. This subsection provides a sample of scenarios where courts have addressed a late TILA claim and provided a clear statement of the grounds for granting or denying a request for tolling. Many other decisions are not amenable to this type of list because they provide multiple grounds for a decision or are too general.

Truth in Lending: 4.1.1 The Scope of This Chapter and Sources of Law

For transactions within the scope of the Truth in Lending Act,1 information must be conveyed to the consumer in the form of written disclosures. Different types of transactions carry distinct disclosure requirements, which can be found in different parts of the statute and regulations, as well as in different chapters of this treatise.

Truth in Lending: 4.1.2 What Is Closed-End Credit?

Closed-end credit is defined by Regulation Z as “consumer credit other than ‘open-end credit.’”10 The statute does not use the term “closed end” but refers to a consumer credit transaction “other than under an open end credit plan.”11

Truth in Lending: 4.1.3.1 Multiple Creditors

For covered transactions in which there is a single creditor, that creditor must make the disclosures.16 In the rare instance in which there are multiple creditors, only one set of disclosures must be given.17 The creditors must agree among themselves as to which creditor must give the disclosures.

Truth in Lending: 4.1.4 Who Must Receive Disclosures

Disclosures must be made to the consumer who is obligated in the transaction.32 If more than one consumer is involved, disclosures may be given to any one consumer who has primary liability on the obligation.33 That consumer must be a principal debtor and not a surety or guarantor.34 When credit is extended to a covered trust, the disclosures may be given to the trustee on behalf of the trust.35 However, in r

Truth in Lending: 4.2.1 General

TILA dictates not only what information must be disclosed but how and when it should be disclosed. These requirements go to the heart of TILA: unless the disclosures are comprehensible and delivered to the consumer prior to entering into the transaction, the disclosures will be of little use to the consumer in making a rational economic decision as to whether to enter into a consumer credit transaction.

Truth in Lending: 4.2.2.1 Listing of Model Forms

The Act requires the Federal Reserve Board (and subsequently the Consumer Financial Protection Bureau) to publish model disclosure forms and clauses upon which creditors may rely.57 In compliance with that mandate the FRB promulgated the following Closed-End Models in Appendix H of Regulation Z:

H-1 Credit Sale Model Form (§ 1026.18)

H-2 Loan Model Form (§ 1026.18)

H-3 Amount Financed Itemization Model Form (§ 1026.18(c))

H-4(A) Variable Rate Model Clauses (§ 1026.18(f)(1))

Truth in Lending: 4.2.3 Meaningful Disclosures

TILA’s core purpose is to provide “meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.”74

Truth in Lending: 4.2.4.1 The Standard As Enunciated by the FRB and CFPB

The statute and Regulation Z require that disclosures must be made clearly and conspicuously.82 All required disclosures are subject to the clear and conspicuous standard, whether or not the individual disclosure gives rise to special relief, such as rescission.83 The official interpretations amplify this standard by requiring that disclosures be made “in a reasonably understandable form.”84 Legibility, type size and font, and conflicting information may

Truth in Lending: 4.2.4.2 The Standard As Enunciated by the Courts

Courts typically judge whether a disclosure is “clear and conspicuous” using an objective standard, that of the “ordinary” consumer.89 If the ordinary consumer would be confused or misled by the disclosures, they are not clear and conspicuous.90 Several courts hold that whether disclosures meet these standards is a question of law to be decided by a judge.91 Consequently, cases can be won or lost on summary judgment.

Truth in Lending: 4.2.4.4 Clear

If a disclosure is misleading or capable of more than one plausible interpretation, it is not “clear.”106 Provision of blank disclosures or disclosures only partially filled out should also be a violation of the clear and conspicuous standard.107 For example, some courts have held that the misstatement or omission of dates on the notice of right to cancel renders the disclosure unclear.108 Disclosures that are illegible are not clear.

Truth in Lending: 4.2.4.5.2 Contradictory information in the TILA disclosures

Disclosing two different numbers as the finance charge violates the clear and conspicuous standard,111 as does disclosing two different numbers as the total of payments.112 Putting both the note rate and the APR on the TILA disclosure may violate the clear and conspicuous standard.113 Stating that the interest rate on a loan may be either discounted or at a premium is not a clear and conspicuous disclosure of the fact that the initial interest rate

Truth in Lending: 4.2.4.5.3 Conflict between the TILA disclosure and the loan documents

In general, contradictions between the TILA disclosure and the other loan documents should violate the “clear and conspicuous” standard.122 Descriptions of negative amortization in the note, for example, should match up with any disclosure given in the TILA disclosures.123 While discrepancies between the APR and interest rate are part of the TILA framework and do not, in themselves, lead to violations of clear and conspicuous disclosure of the APR,124

Truth in Lending: 4.2.4.5.4 Inaccurate additional information

Several courts have addressed the issue of whether additional information violates the clear and conspicuous standard. In general, additional oral or written information given to the consumer may undermine clear and conspicuous disclosure.128 Courts have reached this result even when the information is given by a third party, such as a closing attorney, car dealer, or broker.129

Truth in Lending: 4.2.4.6.1 General

Not only do all required disclosures have to be “conspicuous,” but some disclosures have to be “more conspicuous” than the other required disclosures, specifically, the finance charge and the annual percentage rate.133 This reflects the judgment that these two disclosures are the most important ones to fulfill TILA’s purpose of conveying to consumers the true cost of credit.134

Truth in Lending: 4.2.5.1 General Standards

Unless the consumer consents to the use of electronic disclosures,153 the disclosures must be written,154 and the consumer must be given a copy of the written disclosures.155 The copy given to consumers to keep is the relevant one for determining whether required disclosures are “clear and conspicuous.”156 Until the consumer has the disclosures, no delivery has occurred.

Truth in Lending: 4.2.5.2.1 Introduction

Often, the creditor will have the consumer sign an acknowledgment of receipt of the disclosures and an additional acknowledgement that the forms were completely filled-in. There are two sections of the Act that address the effect of these signed acknowledgments. These two sections, section 1635(c), which describes the impact of a written acknowledgment in the rescission context, and section 1641(b), which provides for the effect of a written acknowledgment as to assignees outside of rescission, are discussed below.

Truth in Lending: 4.2.5.2.2 Written acknowledgment and the right to rescind

For mortgage transactions to which the right to rescind applies, section 1635(c) provides that written acknowledgment of receipt of any required disclosures or rescission notices does no more than create a rebuttable presumption of delivery.166 The acknowledgment should, at most, create a presumption of receipt, not of timely receipt, or of accurate information.167 Whether the consumer received the disclosures before the credit was extended, as TILA requires, should be a separate factual questio

Truth in Lending: 4.2.5.2.3 Written acknowledgment as to assignee liability

Section 1641(b), in contrast with section 1635(c), creates a conclusive presumption in certain circumstances.169 Section 1641(b) only insulates assignees from liability; it does not impact the liability of the original creditor and should not affect the liability of loan originators, servicers, or assignees for their own violations of TILA.170 Only where an assignee is “without knowledge to the contrary” of an originating lender’s TILA violation will 15 U.S.C. § 1641(b) have any force.