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Technical Violations of TILA Might Not Result in Damages for Borrowers
Description Appeals court held that statutory damages for TILA violations, such as failure to explain certain terms or use specific terminology, only applies to certain TILA rules. For other TILA violations there are not damages unless the borrowers can prove actual injury.
Topic Consumer Protection
Key Words Truth in Lending; Damages
C A S E   S U M M A R Y
Facts In various actions, lenders were sued by borrowers for TILA violations in connection with "payday loans"-"short-term, high-interest, single-payment credit for which the lender requires a post-dated check that can be cashed after the borrower's next payday." Borrowers sued for damages because the lender's loan application form referred to "total payment" rather than to "total of payments" as required by the Act to refer to the amount financed and the finance charge. The forms used in the loans also failed to provide adequate explanations of terms such as "finance charge" and "annual percentage rate" and because those terms were in the same typeface as the terms "amount financed" and "total of payments." The former terms must be "disclosed more conspicuously" than the latter terms under TILA. The appeals court addressed the issue of damages for such violations.
Decision To say "total payment" rather than "total of payments" is not a violation for a single-payment loan. However, lenders may not leave out disclosure of various terms nor may they deviate from the proper terminology and typeface requirements of the statute since TILA "receives a hypertechnical reading." Despite the violations of TILA, damages are not available. Statutory damages are available for specific violations of certain TILA rules, but the violations here were not among the violations covered by the statutory damage provision. The borrowers failed to show any actual injury for the technical TILA violations that occurred, so they may not recover.
Citation Brown v. Payday Check Advance, Inc., 202 F.3d 987 (7th Cir., 2000)

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