TILA or Truth in Lending Act as a Claim Against a Dealer: Do I have a TILA claim? (TILA)
Do I have a TILA, Truth in Lending, claim?
The Truth In Lending Act and claims against car dealerships
The Truth In Lending Act is Federal legislation that protects the consumer by requiring, among other things, complete disclosure, such as the interest rate, number of payments, amount financed, amount paid to others, amount retained by sellers, name of the creditor and address of the creditor. The Truth In Lending Act is a strict liability statute. There is no intent requirement. The lender can violate the statute by mistake and continue to be liable for a violation of the Truth In Lending Act. Under some circumstances there is a good faith defense. There are statutory damages and mandatory attorney's fees and costs.Negative Equity
This is a term that means the market value or actual cash value of your trade vehicle is less than the value of the loan. Other terms used in the industry are "upside down" or "buried." The Truth In Lending Act requires that the negative equity be disclosed in the retail installment sales contract under "amount paid to others," because it is paid to the finance company. A common dealer tactic is to lie to the consumer about the value of their trade. The salesman will state that the customer is getting a certain amount for the trade, when in fact the dealer is only inflating the price of the car to offset the negative equity. This violates the Truth In Lending Act because it must be disclosed in writing in the retail agreement. The Truth In Lending Act permits both statutory and actual damages.
Example: (Proper disclosure)
- Price $20,000 (Nothing down, financing 100%)
- Trade value $10,000
- Loan Payoff $13,000
- Amount financed $23,000
Example (Improper disclosure)
- Price $23,000(Nothing down, fiance 100%)
- Trade value$13,000
- Amount financed $23,000
- Thompson v. 10000 RV Sales, 130 Call.App4th 950 (2005)
- Wallace v. Walker Auto Sales, 155 F.3d. 927 (CA 7th Circuit)
The Truth in Lending Act, also known as TILA, is interpreted by Regulation Z, (REG Z) and it explains how TILA is applied and the principles and the purpose of various sections of the Statute.There is an entire section on disclosure and the timing of the disclosures. There is an entire section on advertising requirements. TILA rights are technical and the Truth in Lending Act is somewhat complicated with the regulations but can be an effective tool in enforcing your consumer rights
Consumer Regulations and the FDIC.
Many times a Truth In Lending Act claim can form the basis for a deceptive acts or practices in violation of industry standards or in violation of New Jersey law or in violation of the Administrative Code. As an example the Truth In Lending Act prohibits various lending practices for specific transactions. The time limitations are significantly stricter than the time limitations under the New Jersey Consumer Fraud Act and there were certain taps and restrictions on types of transactions to which the Truth In Lending act apply.
However, it is potentially an option to apply the Truth In Lending act and the various actions which are potentially deceptive to a transaction applying the Consumer Fraud Act. While there are some very good arguments that there is no claim under the New Jersey Consumer Fraud Act because there is no specific claim under the Truth In Lending act is a possible defense. However, much of the conduct restricted under the Truth In Lending act should be prohibited under state law as a deceptive practice or a deceptive manner of doing business.
The Truth In Lending Act can potentially be a very technical claim and one needs to be very familiar with the Code of Federal Regulations and regulation Z. The code of regulations and regulations Z forms the backbone of any claim under the Truth In Lending act if there is a question. You need to familiarize yourself with this body of law intent on proceeding with a claim under the Truth In Lending act might be prohibited by the Code of Federal Regulations, CFR, or regulation Z.
There are some very good claims actionable under the federal law and there are some very good claims actionable under state law based on the aforementioned regulations and federal statutes. However the claims of technical and you need to be very familiar with all of the body of law underlying these types of claims.
Truth in Lending claims are created by federal law. The importance of this fact permits defendants to remove these claims the federal court. Since the truth in lending is federal law the primary jurisdiction is federal court. However, there is no prohibition on litigating truth in lending claims in federal court or arbitration. However, depending on the nature of the truth in lending claim, the type of plaintiff that might be litigating the case and the specific allegations, plaintiff's counsel, experienced consumer attorney, will have to determine whether or not to initially bring these claims in federal court would determine whether or not a defendant might bring the claim.
The Truth In Lending Act (TILA) claims provide numerous abilities for consumers to fight deceptive practices and consumer fraud. The federal government has specifically set forth and delineated numerous disclosures that must be required numerous practices that cannot be implemented. Most of the truth in lending act pertains to disclosures delineation of the finance charges and non-finance charges and applicable interest rates. It would be estimated that it is a significant disclosure requirement for finance companies with regard to commencing lending transactions. The truth in lending disclosures benefit both the consumers and benefit the lenders. All the relevant transactional specifics must be specifically spelled out so as there is no confusion and there is full disclosure. Lack of disclosure can lead to a claim, misleading information can lead to a claim under this federal law.
These claims by their very nature are created by specific statutory language prohibiting certain non-disclosures and requiring certain disclosures. These claims are provided with this statutory damages served to provide a strong motivation finance companies comply with any to the learning environments. Remember again, it is important to understand that TILA is in essence a disclosure statute so as to permit all parties to have a clear agreement from the beginning of the transaction.
Calculating damages can be very difficult this is one of the reasons that the statute specifically sets forth damages for certain claims. These are called statutory damages. These claims are also very good for class action treatment however the statute limits the amount of damages which can be covered in class action claims.
The Federal Trade Commission also known as the FTC has jurisdiction over Truth In Lending claims. The Federal Trade Commission has the ability to institute suit and or levy fines for violations of the Truth In Lending Act. Consumer Plaintiffs can also similarly file suit and/or obtain relief under the Truth In Lending Act and obtain either consequential or statutory damages. The federal law implemented through Regulation Z, also implements the practicalities of the Truth In Lending Act provide for private remedies consumers by the cause of action under the statute.Consumer lawyers litigate TILA claims in New Jersey and litigate auto fraud claims using the TILA Act.