Truth in Lending - tolerance for accuracy - special pleading not required
In re Sterten - 3d Circuit - November 4, 2008
The Truth in Lending Act, 15 U.S.C. § 1601, et seq., imposes disclosure requirements on creditors, exposing them to such penalties as money damages, attorney’s fees and recission for failure to disclose finance charges accurately. See § 1635(a) & (g); § 1640(a).
However, in 1995, in an effort to prevent creditors from being subject to “extraordinary liability” for small disclosure discrepancies, Congress amended the Act to include a “tolerances for accuracy” provision. Under that provision, a creditor is not liable for undisclosed finance charges if those charges fall within a specified range of error. 15 U.S.C. § 1605(f).
We decide whether a Truth in Lending Act defendant who does not specifically defend on the ground that any inaccuracies in its disclosure fell within the tolerance range waives the protection that provision provides. In procedural parlance, we decide whether a tolerances for accuracy defense is affirmative (requiring that it be pled specifically) or general (thus not requiring that it be pled specifically).
We hold that the defense is general, and that a defendant need not specifically raise the Act’s tolerances provision in order to avoid liability for disclosure errors that fall within its range.