Cannon v. Cherry Hill 161 F.Supp.2d 362. Truth in Lending and Consumer Fraud
Cannon v. Cherry Hill Toyota involves the interplay between the Truth in Lending Act, under federal law, and the New Jersey Consumer Fraud Act under state law. In Cannon, the plaintiffs were making allegations under both the New Jersey Consumer Fraud Act and the Truth in Lending Act. In brief, the allegations were that the dealership was paying money to third parties and/or taking a percentage of this money and not disclosing the appropriate amount to the consumers or the plaintiff in the case.
The plaintiffs alleged that the failure to disclose this amount either kept by the dealer or paid to the third parties constituted a violation of the Truth in Lending Act. The plaintiffs alleged that the Truth in Lending Act required the disclosure of this information, otherwise it was actionable under federal law pursuant to the Truth in Lending Act. In addition, the plaintiffs alleged that this was a required disclosure under the New Jersey Consumer Fraud Act and, as a result of the failure to disclose or inappropriate disclosure, the plaintiffs had sustained an ascertainable loss.
Ultimately, the Court held that there was a requirement under the Act to specify the amount paid to third parties and specify whether or not there was an amount paid to the selling dealership. The Court held that the amount paid to the seller dealership constituted a finance charge and, as such, required disclosure under the Truth in Lending Act. The Court, however, determined that in order for the plaintiff to claim consequential damages, there needed to be some stronger connection between the violation of the Truth in Lending Act and the damages claimed. This connection between the alleged misconduct and the damages required some detrimental reliance by the plaintiff. In this specific case, since the plaintiff did not demonstrate this detrimental reliance, the court held that the plaintiff was not entitled to any consequential damages because there were none.
In addition, the Court outlined the similar analysis under the New Jersey Consumer Fraud Act and held that the plaintiff could not demonstrate an actual or an ascertainable loss associated with the defendant’s conduct. Quite simply, the plaintiff could not sustain that there was a loss as a result of this misrepresentation or withholding of pertinent information.
The important part and significant part of this holding was that the violation of the Truth in Lending Act, although not entitling the Plaintiff to consequential damages, did entitle the Plaintiff to statutory damages.
Since there were no statutory damages available under New Jersey law under the theory of the case, the plaintiff was not entitled to an award of attorney’s fees or actual damages under the New Jersey Consumer Fraud Act and, as such, the plaintiff was only entitled to recover under the Truth in Lending Act.
However, recent developments and pertinent legal theories might hold that the plaintiff’s claims under the Consumer Fraud Act through the Truth in Contract and Warranty Act would be actionable and permit the plaintiff to recover statutory damages as well. This would be because a violation of the Truth in Lending Act as a result of a disclosure in the retail installment sales contract would raise to a violation of the New Jersey Consumer Fraud Act.
The Truth In Lending Act is meant to help consumers. There are various provisions of the Truth In Lending Act that range from disclosure, finance charge determination criminal and civil liability annual reports and other consumer friendly issues. The Truth In Lending Act can provide consumers with powerful remedies under certain occasions. Most notably these would concern home purchases and refinances. There are also provisions involving credit cards and closed-end loans such as those loans when you purchased the vehicle.
There is civil liability for Truth In Lending Act violations. There were also attorney’s fees for Truth In Lending Act violations. There is no intent requirement. If a lender violates the Truth In Lending Act there is a liability pursuant to the statutory liability. There is also a criminal liability under certain circumstances.
A major focus of the TILA is to determine, define and set standards for disclosure of finance charges. This is important to consumers because of this requirement under the Truth In Lending Act permits consumers to determine what the cost of the credit is an permits consumers to make comparisons and shop for credit with various lenders. I would estimate that the disclosure requirement and specifically the disclosure requirement for finance charges is a major help, and underlying purpose of the Truth In Lending Act.
If you can shop for financing when acquiring a home or car you can reduce your acquisition costs. This is important because the cost of credit is more than the interest rate. The Truth In Lending Act recognizes that the cost of credit is more than the interest rate but other charge, finance charges and other items like finance charges increased the cost of acquiring goods and services when there is financing.
The purpose of the Truth In Lending Act is really full disclosure and permits consumers see how much credit is costing them and they can make their own comparison, they can make their own calculations and can they can easily shop or credit with the disclosures in hand.
There are certain transactions which are exempted from the application of the Truth In Lending Act. This means the Truth In Lending Act does not apply. These are contained in the section 1603 of the United States Code part 15. So, any analysis must start by looking at the exempted transactions. There is a host of interpretive guidelines established and it is known as regulation Z or reg Z.
Regulation Z is full of guidance compliance the application of the Truth In Lending Act should play out in everyday life. Regulation Z provides extensive examples of the type of situations and how the Truth In Lending Act applies in those various situations. It is very helpful and, in my opinion,, a lot of the examples are common sense. You can see that the drafters of the reg is a/regulations a have taken a significant amount of time to try and explain in terms as simple as possible to consumers and attorneys were reviewing the regulations to determine the application of the Truth In Lending Act.