§7.3 Remedies and Damages

LibraryConsumer Law in Oregon (OSBar) (2013 Ed.)
§7.3 REMEDIES AND DAMAGES

§7.3-1 Administrative Enforcement

The Federal Reserve Board (FRB), and as of July 21, 2011, its successor, the Consumer Financial Protection Bureau (CFPB), are expressly directed to promulgate Regulation Z by the Truth in Lending Act (TILA). 15 USC §1604. Any reference to a requirement of TILA includes reference to Regulation Z. 15 USC §1602(z). Although only the FRB (or the CFPB) has authority to issue regulations, that authority does not impair the authority of any other agency to make rules respecting its own procedures in enforcing compliance with the requirements of TILA. 15 USC §1607(d).

§7.3-2 Civil Liability

The Truth in Lending Act (TILA) imposes civil liability on any creditor that violates TILA. In general, TILA allows consumers to seek civil damages for violations of the provisions in Part B (§§1631-1651, credit transactions), Part D (§§1666-1666j, credit billing), and Part E (§§1667-1667f, consumer leases). 15 USC §1640(a).

Regulation Z itself does not contain any penalty provisions. Nevertheless, the Supreme Court has recognized the availability of private remedies for violations of Regulation Z: "In light of the emphasis Congress placed on agency rulemaking and on private and administrative enforcement of the Act, we cannot conclude that Congress intended those who failed to comply with regulations to be subject to no penalty or to criminal penalties alone." Mourning v. Family Publications Service, Inc., 411 US 356, 376, 93 S Ct 1652, 36 L Ed2d 318 (1973).

In Riggs v. Gov't Emp. Fin. Corp., 623 F2d 68, 72-73 (9th Cir 1980), the court found that a cause of action under TILA survived the death of the consumer and passed to a trustee in bankruptcy.

§7.3-2(a) Individual Actions

15 USC §1640 provides for civil liability for damages. Actual damages are available in any case in which an individual private action may be brought, but statutory damages are available only for violations of certain provisions of the Truth in Lending Act (TILA). 15 USC §1640(a).

In certain situations, the consumer may also seek rescission of the credit transaction. See 15 USC §1635; chapter 19. A consumer may pursue both rescission and damages under TILA and need not elect a remedy. See Eby v. Reb Realty, Inc., 495 F2d 646, 651-652 (9th Cir 1974).

§7.3-2(a)(1) Actual Damages

Unlike statutory damages under the Truth in Lending Act (TILA) (see §7.3-2(a)(2)), actual damages are available in any case in which an individual private action may be brought. 15 USC §1640(a)(1).

A number of circuit courts, including the Ninth Circuit, have held that detrimental reliance is an element in a TILA claim for actual damages. In re Smith, 289 F3d 1155, 1157 (9th Cir 2002); Turner v. Beneficial Corp., 242 F3d 1023, 1028 (11th Cir 2001); Perrone v. Gen. Motors Acceptance Corp., 232 F3d 433, 436-440 (5th Cir 2000); see Stout v. J.D. Byrider, 228 F3d 709, 718 (6th Cir 2000); Peters v. Jim Lupient Oldsmobile Co., 220 F3d 915, 917 (8th Cir 2000). As the Ninth Circuit explained in In re Smith, 289 F3d at 1157:

We join with other circuits and hold that in order to receive actual damages for a TILA violation, i.e., "an amount awarded to a complainant to compensate for a proven injury or loss," Black's Law Dictionary 394 (7th ed. 1999) (emphasis added), a borrower must establish detrimental reliance. Without any evidence in the record to show that [the plaintiff] would either have secured a better interest rate elsewhere, or foregone the loan completely, her argument must fail—she presents no proof of any detrimental reliance, i.e., any actual damage.

§7.3-2(a)(2) Availability of Statutory Damages

Only certain violations of the Truth in Lending Act (TILA) render the creditor liable for statutory damages. The language of 15 USC §1640(a) is somewhat complicated. As a general rule, however, statutory damages are available for any violation of:

• TILA Part B (credit transactions, §§1631-1651), with the exception of certain credit term disclosures in §§1637 and 1638;

• TILA Part D (credit billing, §§1666-1666j); and

• TILA Part E (consumer leases, §§1667-1667f).

See 15 USC §1640(a).

NOTE: Creditors are also liable for statutory damages for failing to comply with any of the rescission requirements of 15 USC §1635 (located in Part B of TILA). 15 USC §1640.

Statutory damages are not available for violations of Part A (general provisions, §§1601-1616) or Part C (credit advertising and limits on credit card fees, §§1661-1665e) of TILA. See 15 USC §1640(a). Also violations concerning certain credit term disclosures required under 15 USC §1637 and 15 USC §1638 do not carry statutory damages. 15 USC §1640(a) (after paragraph (4)).

To obtain statutory damages, the consumer need not show any actual damages as a result of a violation. DeMando v. Morris, 206 F3d 1300, 1303 (9th Cir 2000); Edwards v. Your Credit, Inc., 148 F3d 427, 441 (5th Cir 1998); Herrera v. First N. Sav. & Loan Ass'n, 805 F2d 896, 901 (10th Cir 1986). The debtor may recover the minimum statutory damages even though a finance charge was not levied or collected by the creditor. Eby v. Reb Realty, Inc., 495 F2d 646, 651 (9th Cir 1974); White v. Arlen Realty & Dev. Corp., 540 F2d 645, 648-649 (4th Cir 1975). Statutory damages are also available even if the consumer did not suffer any harm as a result of the violation. Cowen v. Bank United of Texas, FSB, 70 F3d 937, 940 (7th Cir 1995).

It is irrelevant that the consumer was not deceived by the violation or that the consumer could not read or understand English. Zamarippa v. Cy's Car Sales, Inc., 674 F2d 877, 879 (11th Cir 1982). It is also irrelevant that the consumer is in default on the obligation when assessing the creditor's liability. 15 USC §1640(h).

Several courts have held that technical violations of the disclosure requirements, such as the "more conspicuous" requirement of 15 USC...

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