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Repossessions: § 444.2 Unfair credit practices.

(a) In connection with the extension of credit to consumers in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is an unfair act or practice within the meaning of Section 5 of that Act for a lender or retail installment seller directly or indirectly to take or receive from a consumer an obligation that:

Repossessions: § 444.3 Unfair or deceptive cosigner practices.

(a) In connection with the extension of credit to consumers in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is:

(1) A deceptive act or practice within the meaning of section 5 of that Act for a lender or retail installment seller, directly or indirectly, to misrepresent the nature or extent of cosigner liability to any person.

Repossessions: § 444.4 Late charges.

(a) In connection with collecting a debt arising out of an extension of credit to a consumer in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is an unfair act or practice within the meaning of section 5 of that Act for a creditor, directly or indirectly, to levy or collect any delinquency charge on a payment, which payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period, when the only delinquency is attributable to late fee(s) or delinquency charge(s) assessed

Repossessions: § 444.5 State exemptions.

(a) If, upon application to the Federal Trade Commission by an appropriate State agency, the Federal Trade Commission determines that:

(1) There is a State requirement or prohibition in effect that applies to any transaction to which a provision of this rule applies; and

(2) The State requirement or prohibition affords a level of protection to consumers that is substantially equivalent to, or greater than, the protection afforded by this rule;

Repossessions: Introduction and Listing of Provisions

The Dodd-Frank Wall Street Reform and Consumer Protection Act abolished the Office of Thrift Supervision (OTS) and transferred its enforcement authority over federally-related mortgages to the Office of the Comptroller of the Currency (OCC). Pub. L. No. 111-203, tit. X, §§ 312, 313, 124 Stat. 1376 (2010). The OCC reissued the OTS’s regulation, 12 C.F.R. part 590, as 12 C.F.R. part 190 in August 2011. See 76 Fed. Reg. 48,955, 49,151 (Aug. 9, 2011).

TITLE 12—BANKS AND BANKING

Repossessions: § 190.2 Definitions.

For the purposes of this part, the following definitions apply:

(a) Loans mean any loans, mortgages, credit sales, or advances.

(b) Federally-related loans include any loan:

(1) Made by any lender whose deposits or accounts are insured by any agency of the Federal government;

(2) Made by any lender regulated by any agency of the Federal government;

Repossessions: § 190.3 Operation.

(a) The provisions of the constitution or law of any state expressly limiting the rate or amount of interest, discount points, finance charges, or other charges which may be charged, taken, received, or reserved shall not apply to any Federally-related loan:

(1) Made after March 31, 1980; and

(2) Secured by a first lien on:

(i) Residential real property;

Unfair and Deceptive Acts and Practices: 3.1.1 How to Use This Treatise to Prove a Violation

Deception, unfairness, and unconscionability are broad and evolving standards that arguably apply to almost every consumer abuse. Consequently, consumer attorneys should always consider the applicability of a UDAP claim when a consumer complains of merchant, creditor, landlord, or other marketplace misconduct. In addition, a UDAP counterclaim may be appropriate in defending a collection action if an investigation uncovers abuse in the underlying sales transaction, the credit terms, or collection practices.

Unfair and Deceptive Acts and Practices: 3.2.1 Pleading Per Se Violations

The first step in showing that a practice is a UDAP violation is to determine if it is an automatic or “per se” UDAP violation. A per se or automatic UDAP violation occurs when a practice violates a specific UDAP guideline, and violation of that guideline is automatically a UDAP violation.

Unfair and Deceptive Acts and Practices: 3.2.2.1 Most UDAP Statutes Prohibit Specific Enumerated Practices

The first place to look for per se violations is in the list of enumerated prohibitions found in the UDAP statute itself. Most state UDAP statutes prohibit itemized practices in what is sometimes called the statute’s “laundry list” of enumerated deceptive practices. There is no substitute for simply reading the statute to see which prohibitions are enumerated.14 Because of the enormous variation from state to state, this treatise will not analyze individual state UDAP laundry lists.

Unfair and Deceptive Acts and Practices: 3.2.5 UDTPA Violations As Per Se UDAP Violations

Delaware, Georgia, Hawaii, Illinois, Maine, Nebraska, Ohio and Oklahoma have enacted two separate UDAP statutes—one modeled after the Uniform Deceptive Trade Practices Act (UDTPA)30 and which often does not give consumers a private right of action,31 and another UDAP statute that does provide a private right of action. The UDTPA contains a laundry list of prohibited practices that may not be explicitly listed in the state’s other UDAP statute.

Unfair and Deceptive Acts and Practices: 3.2.7.1 Importance of Finding Violations of Other Laws Per Se UDAP Violations

A critical issue is whether a violation of another statute, particularly one meant to protect the public, is a per se UDAP violation. Other consumer protection laws, especially when agency regulations and local ordinances are included, often have very specific requirements and prohibitions that can add concreteness to a UDAP claim.45 A finding that a violation of federal or state law is a per se UDAP violation can open up one of the most effective uses of a UDAP statute.

Unfair and Deceptive Acts and Practices: 3.2.7.2 UDAP Scope Issues May Limit Applicability of Per Se Approach

The enormous utility of a per se approach to violation of other state laws has a significant limitation. The challenged practice must be within the scope of the UDAP statute. There can be no per se UDAP violation for a violation of the landlord-tenant code if landlord practices are outside the scope of a particular UDAP statute. Similarly, if a state’s courts find that the legislature intended the state insurance legislation to displace a UDAP statute’s applicability to insurance practices, a violation of insurance legislation is not a UDAP violation.

Unfair and Deceptive Acts and Practices: 3.2.7.3.1 One of two California UDAP statutes explicitly adopts per se approach

One of California’s two UDAP statutes, the Unfair Competition Law, prohibits not only unfair or deceptive conduct, but also unlawful business conduct.48 Thus the statute itself specifies that a violation of another statute is a per se UDAP violation. The state’s courts find that such unlawful business activity includes anything that is forbidden by law.49 But the reference to acts made illegal by other statutes is not a limitation on the UDAP statute’s scope.

Unfair and Deceptive Acts and Practices: 3.3.1 Introduction

In many situations, an unscrupulous practice does not specifically violate an enumerated prohibition in the UDAP statute, a UDAP regulation, or some other statute. The practice may still be a UDAP violation, but the consumer litigant must take extra steps to demonstrate liability to the court. When a practice must be proven deceptive or unfair without the aid of a per se theory, the consumer litigant should adopt a three-step approach.

Unfair and Deceptive Acts and Practices: 3.3.3 Practice-Specific Precedent

The second step, after fully developing the facts, is to produce for the court specific precedent that holds the exact practice or some similar practice to be a UDAP violation. Courts may feel uneasy dealing with broad statutes generally prohibiting deception or unfairness, or even the UDAP standards developed by the FTC, federal and state courts. To the extent that cases factually on point exist, it is always helpful to provide the court with this precedent.

Unfair and Deceptive Acts and Practices: 3.4.2.1 General

State legislative history for a UDAP statute is often sparse. However, there is often legislative history for a model law upon which the UDAP statute is based. Local law review articles written at the time of enactment can also be helpful to courts in determining the legislature’s objectives.

Repossessions: 14.2.10.4 Relation of Federal and State Law Standards

The CLA states that it does “not annul, alter, or affect, or exempt any person . . . from complying with, the laws of any State with respect to consumer leases, except to the extent that those laws are inconsistent with any [CLA] provision.”259 State laws providing greater protection to consumers are not inconsistent with the CLA.260 Consequently, state laws that provide for the same or a lower early termination charge than the CLA standard remain effective and are not preempted.