Friday, January 06, 2006

consumer - TILA - disclosures - creditor v. 3d party

Vallies v. Sky Bank - 3d Cir. - January 5, 2006

Held: Single creditor bank must make all TILA disclosures and cannot rely on independent disclosure of required information by a third party seller, a car dealer

Creditor bank violated the TILA when it excluded certain debt cancellation fees from the calculation of the finance charge w/o disclosing the amount of the fees and that cancellation coverage was optional, despite the fact that the disclosures were ultimately made by a non-creditor third party, a car dealer from whom plaintiff bought a vehicle. The car dealer and bank acted independently of each other. The dealer was not the bank's agent.

The TILA in plain terms mandates that the "creditor" to make the required disclosures. The Act "clearly vests the duty of disclosure on the, and only on the, actual creditor and not on any third party to the credit transaction." The "creditor, and the creditor alone, is required to disclose...required information." The "clear language and meaning of the TILA [requires] that all disclosures be made by a single creditor....the actual creditor and not some third party." The "TILA places a clear and affirmative duty on the actual creditor itself to disclose any and all required information....[W]here the creditor fails to disclose this information, it has violated TILA regardless of the ultimate receipt of information." The court rejected the notion that its conclusion was "hypertechnical...or overly formalistic. The creditor need only follow the law...."

Donald Marritz
MidPenn Legal Services