Truth in Lending Act (TILA) Regulation Z

The federal statute -- the Truth in Lending Act (TILA) (15 U.S.C. 1601 et seq.) -- "promotes the 'informed use of credit' by consumers." (Household Credit Services, Inc. v. Pfennig (2004) 541 U.S. 232, 235.) "TILA regulates, inter alia, the substance and form of disclosures that creditors . . . must make to consumers . . . and provides a civil remedy for consumers who suffer damages as a result of a creditor's failure to comply with TILA's provisions." (Ibid.) TILA does not apply to credit transactions primarily for business or commercial purposes. (15 U.S.C. 1601(1).) A creditor who violates TILA is liable to the consumer for the "actual damage" suffered by the consumer and twice the "finance charge in connection with the transaction." (15 U.S.C. 1640(2)(A).) "Under TILA, a "'finance charge' is an amount 'payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit.'" (Household Credit Services, Inc. v. Pfennig, 541 U.S. 232, 236 (2004).) An assignee of a consumer credit contract (such as the credit union) may, under some circumstances, suffer liability under TILA. A civil action "which may be brought against a creditor may be maintained against any assignee of such creditor only if the TILA violation . . . is apparent on the face of the disclosure statement, except where the assignment was involuntary." (15 U.S.C. 1641(a).) TILA is implemented by Regulation Z (12 C.F.R. 226.1 et seq.) promulgated by the Federal Reserve Board pursuant to 15 U.S.C. 1604. Regulation Z requires a creditor to disclose the identity of the creditor, the amount financed (calculated by subtracting any down payment from the cash price), the finance charge ("the dollar amount the credit will cost you"), the annual percentage rate, the payment schedule, and the total of payments ("the amount you will have paid when you have made all scheduled payments"). (12 C.F.R. 226.18.) A creditor must also provide the consumer with an "itemization of amount financed," but Regulation Z contains no express disclosure requirement for a deferred down payment. (12 C.F.R. 226.18(c).)