§ 1663. Advertising of open end credit plans

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1968

   Truth in Lending Act

   Pub. L. 90–321 title I § 143 · 82 Stat. 146

   Enacted · 15 U.S.C. § 1663

   Pub. L. 90–321, title I, § 143, May 29, 1968, 82 Stat. 158

   Source evidence

   Code source credit
   Pub. L. 90–321, title I, § 143, May 29, 1968, 82 Stat. 158

   Enacted provision · exact public law section
   § 143. Advertising of open end credit plans No advertisement to aid, promote, or assist directly or indirectly the extension of consumer credit under an open end credit plan may set forth any of the specific terms of that plan or the appropriate rate determined under section 127(a)(6) unless it also clearly and conspicuously sets forth all of the foil owing items: (1) The time period, if any, within which any credit extended may be repaid without incurring a finance charge. (2) The method of determining the balance upon which a finance charge will be fin posed. (3) The method of determining the amount of the finance charge, including any minimum or fixed amount imposed as a finance charge. (4) Where periodic rates may be used to compute, the finance charge, the periodic rates expressed as annual percentage rates. (5) Such other or additional information for the advertising of open end credit plans as the Board may by regulation require to provide for adequate comparison of credit costs as between different types of open end credit plans.

2. 1980

   Truth in Lending Simplification and Reform Act

   Pub. L. 96–221 title VI · 94 Stat. 131

   1. Struck · 15 U.S.C. § 1663

      Pub. L. 96–221 in existing introductory text struck out applicability of rate determined under section 1637(a)(5) of this title

   2. Substituted · 15 U.S.C. § 1663

      Pub. L. 96–221 in existing introductory text amended section generally substituting items setting forth minimum or fixed amount, etc., set out in pars. (1) to (3), for items time period, etc., set out in pars. (1) to (5)

   Source evidence

   Code amendment note
   Pub. L. 96–221 in existing introductory text struck out applicability of rate determined under section 1637(a)(5) of this title, and amended section generally substituting items setting forth minimum or fixed amount, etc., set out in pars. (1) to (3), for items time period, etc., set out in pars. (1) to (5).

   Enacted provision · exact public law
   TITLE VI— TRUTH IN LENDING SIMPLIFICATION Sec. 601. short title This title may be cited as the “Truth in Lending Simplification and Reform Act”. Sec. 602. definitions (a) Section 103(f) of the Truth in Lending Act (15 U.S.C. 1602(f)) is amended— (1) by striking out the first sentence and inserting in lieu thereof the following: “The term ‘creditor’ refers only to a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required; and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement. Notwithstanding the previous sentence, a person who regularly arranges for the extension of consumer credit, which is payable in more than four installments or for which the payment of a finance charge is or may be required, from persons who are not creditors is a creditor, and in the case of an open end credit plan involving a credit card, the card issuer and any person who honors the credit card and offers a discount which is a finance charge are creditors.”; and (2) by redesignating the references to sections 127(a)(6), 127(a)(7), 127(a)(8), 127(b)(9), and 127(b)(11) in the next succeeding sentence as references to sections 127(a)(5), 127(a)(6), 127(a)(7), 127(b)(8), and 127(b)(10), respectively. (b) The first sentence of section 103(g) of the Truth in Lending Act (15 U.S.C. 1602(g)) is amended to read as follows: “The term ‘credit sale’ refers to any sale in which the seller is a creditor.”. Sec. 603. exempted transactions (a) Section 103(h) of the Truth in Lending Act (15 U.S.C. 1602(h)) is amended by striking out “household, or agricultural” and inserting in lieu thereof “or household”. (b) Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by redesignating subsections (s) and (t) as subsections (x) and (y), respectively, and by inserting after subsection (r) the following new subsections: “(s) The term ‘agricultural purposes’ includes the production, “Agricultural purposes.” harvest, exhibition, marketing, transportation, processing, or manufacture of agricultural products by a natural person who cultivates, plants, propagates, or nurtures those agricultural products, including but not limited to the acquisition of farmland, real property with a farm residence, and personal property and services used primarily in farming. “(t) The term ‘agricultural products’ includes agricultural, horticultural, “Agricultural products.” viticultural, and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any products thereof, including processed and manufactured products, and any and all products raised or produced on farms and any processed or manufactured products thereof.”. (c) Section 104 of the Truth in Lending Act (15 U.S.C. 1603) is amended— (1) by amending paragraph (1) to read as follows: “(1) Credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes, or to government or governmental agencies or instrumentalities, or to organizations.”; (2) by amending paragraph (3) to read as follows: “(3) Credit transactions, other than those in which a security interest is or will be acquired in real property, or in personal property used or expected to be used as the principal dwelling of the consumer, in which the total amount financed exceeds $25,000.”; and (3) by striking out paragraph (5). Sec. 604. open end credit plan Section 103(i) of the Truth in Lending Act (15 U.S.C. 1602(i)) is amended to read as follows: “(i) The term ‘open end credit plan’ means a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance. A credit plan which is an open end credit plan within the meaning of the preceding sentence is an open end credit plan even if credit information is verified from time to time.”. Sec. 605. model forms Section 105 of the Truth in Lending Act (15 U.S.C. 1605) is amended by inserting “(a)” before “The”, and by adding at the end thereof the following: “(b) The Board shall publish model disclosure forms and clauses for common transactions to facilitate compliance with the disclosure requirements of this title and to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures. In devising such forms, the Board shall consider the use by creditors or lessors of data processing or similar automated equipment. Nothing in this title may be construed to require a creditor or lessor to use any such model form or clause prescribed by the Board under this section. A creditor or lessor shall be deemed to be in compliance with the disclosure provisions of this title with respect to other than numerical disclosures if the creditor or lessor (1) uses any appropriate model form or clause as published by the Board, or (2) uses any such model form or clause and changes it by (A) deleting any information which is not required by this title, or (B) rearranging the format, if in making such deletion or rearranging the format, the creditor or lessor does not affect the substance, clarity, or meaningful sequence of the disclosure. “(c) Model disclosure forms and clauses shall be adopted by the Board after notice duly given in the Federal Register and an opportunity for public comment in accordance with section 553 of title 5, United States Code. “(d) Any regulation of the Board, or any amendment or interpretation thereof, requiring any disclosure which differs from the disclosures 15 USC 1666 et seq., 1667 et seq. previously required by this chapter, chapter 4, or chapter 5, or by any regulation of the Board promulgated thereunder shall have an effective date of that October 1 which follows by at least six months the date of promulgation, except that the Board may at its discretion take interim action by regulation, amendment, or interpretation to lengthen the period of time permitted for creditors or lessors to adjust their forms to accommodate new requirements or shorten the length of time for creditors or lessors to make such adjustments when it makes a specific finding that such action is necessary to comply with the findings of a court or to prevent unfair or deceptive disclosure practices. Notwithstanding the previous sentence, any creditor or lessor may comply with any such newly promulgated disclosure requirements prior to the effective date of the requirements.”. Sec. 606. components of finance charge (a) Section 106(a) of the Truth in Lending Act (15 U.S.C. 1605(a)) is amended by striking out “, including any of the following types of charges which are applicable” and inserting in lieu thereof the following: “. The finance charge does not include charges of a type payable in a comparable cash transaction. Examples of charges which are included in the finance charge include any of the following types of charges which are applicable”. (b) Section 106(d) of the Truth in Lending Act (15 U.S.C. 1605(d)) is amended by striking out paragraphs (3) and (4). Sec. 607. accuracy of annual percentage rate (a) Section 107(c) of the Truth in Lending Act (15 U.S.C. 1606(c)) is amended to read as follows: “(c) The disclosure of an annual percentage rate is accurate for the purpose of this title if the rate disclosed is within a tolerance not greater than one-eighth of 1 per centum more or less than the actual rate or rounded to the nearest one-fourth of 1 per centum. The Board may allow a greater tolerance to simplify compliance where irregular payments are involved.”. (b) Section 107(e) of the Truth in Lending Act (15 U.S.C. 1606(e)) is amended by striking out “(c) or”. (c) Section 107(f) of the Truth in Lending Act (15 U.S.C. 1606(f)) is Repeal. hereby repealed. Sec. 608. restitution (a) Section 108 of the Truth in Lending Act (15 U.S.C. 1607) is amended by adding at the end thereof the following: “(e) (1) In carrying out its enforcement activities under this section, each agency referred to in subsection (a) or (c), in cases where an annual percentage rate or finance charge was inaccurately disclosed, shall notify the creditor of such disclosure error and is authorized in accordance with the provisions of this subsection to require the creditor to make an adjustment to the account of the person to whom credit was extended, to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. For the purposes of this subsection, except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit was extended, in determining whether a disclosure error has occurred and in calculating any adjustment, (A) each agency shall apply (i) with respect to the annual percentage rate, a tolerance of one-quarter of 1 percent more or less than the actual rate, determined without regard to section 107(c) of this title, except in the case of an irregular Ante, p. 170. mortgage lending transaction, and (ii) with respect to the finance charge, a corresponding numerical tolerance as generated by the tolerance provided under this subsection for the annual percentage rate; except that (B) with respect to transactions consummated after two years following the effective date of section 608 of the Truth in Lending Simplification and Reform Act, each agency shall apply (i) Supra. for transactions that have a scheduled amortization of ten years or less, with respect to the annual percentage rate, a tolerance not to exceed one-quarter of 1 percent more or less than the actual rate, determined without regard to section 107(c) of this title, but in no event a tolerance of less than the tolerances allowed under section 107(c), (ii) for transactions that have a scheduled amortization of more than ten years, with respect to the annual percentage rate, only such tolerances as are allowed under section 107(c) of this title, and (iii) for all transactions, with respect to the finance charge, a corresponding numerical tolerance as generated by the tolerances provided under this subsection for the annual percentage rate. “(2) Each agency shall require such an adjustment when it determines that such disclosure error resulted from (A) a clear and consistent pattern or practice of violations, (B) gross negligence, or (C) a willful violation which was intended to mislead the person to whom the credit was extended. Notwithstanding the preceding sentence, except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit was extended, an agency need not require such an adjustment if it determines that such disclosure error— “(A) resulted from an error involving the disclosure of a fee or charge that would otherwise be excludable in computing the finance charge, including but not limited to violations involving the disclosures described in sections 106(b), (c) and (d) of this title, in which event the agency may require such remedial action as it determines to be equitable, except that for transactions consummated after two years after the effective date of section 608 of the Ante, p. 171. 15 USC 1605. Truth in Lending Simplification and Reform Act, such an adjustment shall be ordered for violations of section 106(b); “(B) involved a disclosed amount which was 10 per centum or less of the amount that should have been disclosed and (i) in cases where the error involved a disclosed finance charge, the annual percentage rate was disclosed correctly, and (ii) in cases where the error involved a disclosed annual percentage rate, the finance charge was disclosed correctly; in which event the agency may require such adjustment as it determines to be equitable; “(C) involved a total failure to disclose either the annual percentage rate or the finance charge, in which event the agency may require such adjustment as it determines to be equitable; or “(D) resulted from any other unique circumstance involving clearly technical and nonsubstantive disclosure violations that do not adversely affect information provided to the consumer and that have not misled or otherwise deceived the consumer. In the case of other such disclosure errors, each agency may require such an adjustment. “(3) Notwithstanding paragraph (2), no adjustment shall be ordered (A) if it would have a significantly adverse impact upon the safety or soundness of the creditor, but in any such case, the agency may require a partial adjustment in an amount which does not have such an impact, except that with respect to any transaction consummated after the effective date of section 608 of the Truth in Lending Ante, p. 171. Simplification and Reform Act, the agency shall require the full adjustment, but permit the creditor to make the required adjustment in partial payments over an extended period of time which the agency considers to be reasonable, (B) if the amount of the adjustment would be less than $1, except that if more than one year has elapsed since the date of the violation, the agency may require that such amount be paid into the Treasury of the United States, or (C) except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit was extended, in the case of an open-end credit plan, more than two years after the violation, or in the case of any other extension of credit, as follows: “(i) with respect to creditors that are subject to examination by the agencies referred to in paragraphs (1) through (3) of section 108(a) of this title, except in connection with violations arising from practices identified in the current examination and only in connection with transactions that are consummated after the date of the immediately preceding examination, except that where practices giving rise to violations identified in earlier examinations have not been corrected, adjustments for those violations shall be required in connection with transactions consummated after the date of the examination in which such practices were first identified; “(ii) with respect to creditors that are not subject to examination by such agencies, except in connection with transactions that are consummated after May 10, 1978; and “(iii) in no event after the later of (I) the expiration of the life of the credit extension, or (II) two years after the agreement to extend credit was consummated. “(4) (A) Notwithstanding any other provision of this section, an adjustment under this subsection may be required by an agency referred to in subsection (a) or (c) only by an order issued in accordance with cease and desist procedures provided by the provision of law referred to in such subsections. “(B) In the case of an agency which is not authorized to conduct cease and desist proceedings, such an order may be issued after an agency hearing on the record conducted at least thirty but not more than sixty days after notice of the alleged violation is served on the creditor. Such a hearing shall be deemed to be a hearing which is subject to the provisions of section 8(h) of the Federal Deposit Insurance Act and shall be subject to judicial review as provided 12 USC 1818. therein. “(5) Except as otherwise specifically provided in this subsection and notwithstanding any provision of law referred to in subsection (a) or (c), no agency referred to in subsection (a) or (c) may require a creditor to make dollar adjustments for errors in any requirements under this title, except with regard to the requirements of section 165. Post, p. 184. “(6) A creditor shall not be subject to an order to make an adjustment, if within sixty days after discovering a disclosure error, whether pursuant to a final written examination report or through the creditor’s own procedures, the creditor notifies the person concerned of the error and adjusts the account so as to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. “(7) Notwithstanding the second sentence of subsection (e)(i), subsection (e)(3)(C)(i), and subsection (e)(3)(C)(ii), each agency referred to in subsection (a) or (c) shall require an adjustment for an annual percentage rate disclosure error that exceeds a tolerance of one quarter of one percent less than the actual rate, determined without regard to section 107(c) of this title, except in the case of an irregular Ante, p. 170. mortgage lending transaction, with respect to any transaction consummated between January 1, 1977, and the effective date of section 608 of the Truth in Lending Simplification and Reform Act.”. Ante, p. 171. Effective date. 15 USC 1607 note. (b) This section shall take effect on the date of enactment of the Truth in Lending Simplification and Reform Act. (c) Effective one year after the date of enactment of the Truth in Lending Simplification and Reform Act, section 108(e)(1)(A)(i) and Ante, p. 168. 15 USC 1607. Ante, p. 171. section 108(e)(7) of the Truth in Lending Act are amended by striking out “, except in the case of an irregular mortgage lending transaction”. Sec. 609. effect on other laws Section 111(a) of the Truth in Lending Act (15 U.S.C. 1610(a)) is amended to read as follows: “(a) (1) Chapters 1, 2, and 3 do not annul, alter, or affect the laws of 15 USC 1601 et seq., 1631 et seq., 1661 et seq. any State relating to the disclosure of information in connection with credit transactions, except to the extent that those laws are inconsistent with the provisions of this title, and then only to the extent of the inconsistency. Upon its own motion or upon the request of any creditor, State, or other interested party which is submitted in accordance with procedures prescribed in regulations of the Board, the Board shall determine whether any such inconsistency exists. If the Board determines that a State-required disclosure is incon-sistent, creditors located in that State may not make disclosures using the inconsistent term or form, and shall incur no liability under the law of that State for failure to use such term or form, notwithstanding that such determination is subsequently amended, rescinded, or determined by judicial or other authority to be invalid for any reason. “(2) Upon its own motion or upon the request of any creditor, State, or other interested party which is submitted in accordance with procedures prescribed in regulations of the Board, the Board shall determine whether any disclosure required State-required disclosure. under the law of any State is substantially the same in meaning as a disclosure required under this title. If the Board determines that a State-required disclosure is substantially the same in meaning as a disclosure required by this title, then creditors located in that State may make such disclosure in compliance with such State law in lieu of the disclosure required by this title, except that the annual percentage rate and finance charge shall be disclosed as required by section Post, p. 175. 122.”. Sec. 610. annual reports (a) Section 114 of the Truth in Lending Act (15 U.S.C. 1613) is amended by striking out “Not later than January 3 of each year after 1969,” and inserting in lieu thereof “Each year”. (b) Section 18(f)(6) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(6)) is amended by striking out “not later than March 15 of”. (c) Section 707 of the Equal Credit Opportunity Act (15 U.S.C. 16910 is amended by striking out “Not later than February 1 of each year after 1976” and inserting in lieu thereof “Each year”. Sec. 611. general disclosure requirements Sections 121 and 122 of the Truth in Lending Act (15 U.S.C. 1631 and 1632) are amended to read as follows: “8121. General requirement of disclosure “(a) Subject to subsection (b), a creditor or lessor shall disclose to the person who is obligated on a consumer lease or a consumer credit transaction the information required under this title. In a transaction involving more than one obligor, a creditor or lessor, except in a 15 USC 1635. transaction under section 125, need not disclose to more than one of such obligors if the obligor given disclosure is a primary obligor. “(b) If a transaction involves one creditor as defined in section Ante, p. 168. 15 USC 1667. 103(f), or one lessor as defined in section 181(3), such creditor or lessor shall make the disclosures. If a transaction involves more than one creditor or lessor, only one creditor or lessor shall be required to make the disclosures. The Board shall by regulation specify which creditor or lessor shall make the disclosures. “(c) The Board may provide by regulation that any portion of the information required to be disclosed by this title may be given in the form of estimates where the provider of such information is not in a position to know exact information. “(d) The Board shall determine whether tolerances for numerical disclosures other than the annual percentage rate are necessary to facilitate compliance with this title, and if it determines that such tolerances are necessary to facilitate compliance, it shall by regulation permit disclosures within such tolerances. The Board shall exercise its authority to permit tolerances for numerical disclosures other than the annual percentage rate so that such tolerances are narrow enough to prevent such tolerances from resulting in misleading disclosures or disclosures that circumvent the purposes of this title. “§122. Form of disclosure; additional information “(a) Information required by this title shall be disclosed clearly and conspicuously, in accordance with regulations of the Board. The “Annual percentage rate” and “finance charge.” terms ‘annual percentage rate’ and ‘finance charge’ shall be disclosed more conspicuously than other terms, data, or information provided in connection with a transaction, except information relating to the identity of the creditor. Regulations of the Board need not require that disclosures pursuant to this title be made in the order set forth in this title and, except as otherwise provided, may permit the use of terminology different from that employed in this title if it conveys substantially the same meaning. “(b) Any creditor or lessor may supply additional information or explanation with any disclosures required under chapters 4 and 5 15 USC 1666 et seq., 1667 et seq. Post, p. 179. and, except as provided in section 128(b)(1), under this chapter.”. Sec. 612. rescission (a) (1) Section 125(a) of the Truth in Lending Act (15 U.S.C. 1635(a)) is amended to read as follows: “(a) Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this title, whichever is later, by notifying the creditor, in accordance with regulations of the Board, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Board, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.”. (2) Section 103 of the Truth in Lending Act (15 U.S.C. 1602), as amended by section 603(b), is amended by adding at the end thereof Ante, p. 169. the following: “(u) The term ‘material disclosures’ means the disclosure, as “Material disclosures required by this title, of the annual percentage rate, the method of determining the finance charge and the balance upon which a finance charge will be imposed, the amount of the finance charge, the amount to be financed, the total of payments, the number and amount of payments, and the due dates or periods of payments scheduled to repay the indebtedness.”. (3) Section 125(b) of the Truth in Lending Act (15 U.S.C. 1635(b)) is amended by striking out “ten days” each place it appears therein and inserting in lieu thereof “20 days”. (4) Section 125(b) of the Truth in Lending Act (15 U.S.C. 1635(b)) is amended by adding at the end thereof the following new sentence: “The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.”. (5) Section 125(c) of the Truth in Lending Act (15 U.S.C. 1635(c)) is amended by inserting “information, forms, and” after “whom”. (6) Section 125 of the Truth in Lending Act (15 U.S.C. 1635) is amended by striking out subsections (e) and (f) and inserting in lieu thereof the following: “(e) (1) This section does not apply to— “(A) a residential mortgage transaction as defined in section Infra. 103(w); “(B) a transaction which constitutes a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property; “(C) a transaction in which an agency of a State is the creditor; or “(D) advances under a preexisting open end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such plan. “(2) The provisions of paragraph (1)(D) shall cease to be effective 3 years after the effective date of the Truth in Lending Simplification Ante, p. 168. and Reform Act. “(f) An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this chapter have not been delivered to the obligor, except that if (1) any agency empowered to enforce the provisions of this title institutes a proceeding to enforce the provisions of this section within three years after the date of consummation 15 USC 1635. of the transaction, (2) such agency finds a violation of section 125, and (3) the obligor’s right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding, or any judicial review or period for judicial review thereof, whichever is later. “(g) In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award 15 USC 1640. relief under section 130 for violations of this title not relating to the right to rescind.”. (b) Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by inserting after subsection (u) the following: “(v) The term ‘dwelling’ means a residential structure or mobile home which contains one to four family housing units, or individual units of condominiums or cooperatives. “(w) The term ‘residential mortgage transaction’ means a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against the con-sumer’s dwelling to finance the acquisition or initial construction of such dwelling.”. Sec. 613. open end disclosures (a) Section 127(a) of the Truth in Lending Act (15 U.S.C. 1637(a)) is amended— (1) by adding at the end of paragraph (1) the following new sentence: “If no such time period is provided, the creditor shall disclose such fact.”; (2) by striking out paragraph (5) and redesignating paragraphs (6), (7), and (8) as paragraphs (5), (6), and (7), respectively; and (3) by amending paragraphs (5) and (6), as redesignated by paragraph (2), to read as follows: “(5) Identification of other charges which may be imposed as part of the plan, and their method of computation, in accordance with regulations of the Board. “(6) In cases where the credit is or will be secured, a statement that a security interest has been or will be taken in (A) the property purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type.”. (b) Section 127(b)(2) of the Truth in Lending Act (15 U.S.C. 1637(b)(2)) is amended to read as follows: “(2) The amount and date of each extension of credit during the period, and a brief identification, on or accompanying the statement of each extension of credit in a form prescribed by the Board sufficient to enable the obligor either to identify the transaction or to relate it to copies of sales vouchers or similar instruments previously furnished, except that a creditor’s failure to disclose such information in accordance with this paragraph shall not be deemed a failure to comply with this chapter or this title if (A) the creditor maintains procedures reasonably adapted to procure and provide such information, and (B) the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section 161. In lieu of complying with the requirements of the 15 USC 1666. previous sentence, in the case of any transaction in which the creditor and seller are the same person, as defined by the Board, and such person’s open end credit plan has fewer than 15,000 accounts, the creditor may elect to provide only the amount and date of each extension of credit during the period and the seller’s name and location where the transaction took place if (A) a brief identification of the transaction has been previously furnished, and (B) the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section 161.”. 15 USC 1666. (c) Section 127(b) of the Truth in Lending Act (15 U.S.C. 1637) is amended by striking out paragraph (7) and by redesignating paragraphs (8), (9), (10), and (11) as paragraphs (7), (8), (9), and (10), respectively. (d) Section 127(a)(7) of the Truth in Lending Act (15 U.S.C. 1637(a)), as redesignated by subsection (a)(2), is amended by striking out “each of two billing cycles per year, at semiannual intervals” and inserting in lieu thereof one billing cycle per calendar year, at intervals of not less than six months or more than eighteen months”. (e) Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is Repeal. hereby repealed. (f) Section 143 of the Truth in Lending Act (15 U.S.C. 1663) is Post, p. 183. amended by striking out “or the appropriate rate determined under section 127(a)(5)” Ante, p. 176. (g) Section 161(a) of the Truth in Lending Act (15 U.S.C. 1666(a)) is amended by redesignating the references to sections 127(b)(H) and 127(a)(8) as references to sections 127(b)(10) and 127(a)(7), respectively. Sec. 614. other than open end disclosures (a) Section 128(a) of the Truth in Lending Act (15 U.S.C. 1638(a)) is amended to read as follows: “(a) For each consumer credit transaction other than under an open end credit plan, the creditor shall disclose each of the following items, to the extent applicable: “(1) The identity of the creditor required to make disclosure. “(2) (A) The ‘amount financed’, using that term, which shall be the amount of credit of which the consumer has actual use. This amount shall be computed as follows, but the computations need not be disclosed and shall not be disclosed with the disclosures conspicuously segregated in accordance with subsection (b)(1): “(i) take the principal amount of the loan or the cash price less down payment and trade-in; “(ii) add any charges which are not part of the finance charge or of the principal amount of the loan and which are financed by the consumer, including the cost of any items 15 USC 1605. excluded from the finance charge pursuant to section 106; and “(iii) subtract any charges which are part of the finance charge but which will be paid by the consumer before or at the time of the consummation of the transaction, or have been withheld from the proceeds of the credit. “(B) In conjunction with the disclosure of the amount financed, a creditor shall provide a statement of the consumer’s right to obtain, upon a written request, a written itemization of the amount financed. The statement shall include spaces for a ‘yes’ and ‘no’ indication to be initialed by the consumer to indicate whether the consumer wants a written itemization of the amount financed. Upon receiving an affirmative indication, the creditor shall provide, at the time other disclosures are required to be furnished, a written itemization of the amount financed. “Itemization of the amount financed.” For the purposes of this subparagraph, ‘itemization of the amount financed’ means a disclosure of the following items, to the extent applicable: “(i) the amount that is or will be paid directly to the consumer; “(ii) the amount that is or will be credited to the consumer’s account to discharge obligations owed to the creditor; “(iii) each amount that is or will be paid to third persons by the creditor on the consumer’s behalf, together with an identification of or reference to the third person; and “(iv) the total amount of any charges described in the preceding subparagraph (A)(iii). “(3) The ‘finance charge’, not itemized, using that term. “(4) The finance charge expressed as an ‘annual percentage rate’, using that term. This shall not be required if the amount financed does not exceed $75 and the finance charge does not exceed $5, or if the amount financed exceeds $75 and the finance charge does not exceed $7.50. “(5) The sum of the amount financed and the finance charge, which shall be termed the ‘total of payments’. “(6) The number, amount, and due dates or period of payments scheduled to repay the total of payments. “(7) In a sale of property or services in which the seller is the Ante, p. 174. creditor required to disclose pursuant to section 121(b), the ‘total sale price’, using that term, which shall be the total of the cash price of the property or services, additional charges, and the finance charge. “(8) Descriptive explanations of the terms ‘amount financed’, ‘finance charge’, ‘annual percentage rate’, ‘total of payments’, and ‘total sale price’ as specified by the Board. The descriptive explanation of ‘total sale price’ shall include reference to the amount of the downpayment. “(9) Where the credit is secured, a statement that a security Secured credit statement. interest has been taken in (A) the property which is purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type. “(10) Any dollar charge or percentage amount which may be imposed by a creditor solely on account of a late payment, other than a deferral or extension charge. “(11) A statement indicating whether or not the consumer is entitled to a rebate of any finance charge upon refinancing or prepayment in full pursuant to acceleration or otherwise, if the obligation involves a precomputed finance charge. A statement indicating whether or not a penalty will be imposed in those same circumstances if the obligation involves a finance charge computed from time to time by application of a rate to the unpaid principal balance. “(12) A statement that the consumer should refer to the appropriate contract document for any information such document provides about nonpayment, default, the right to accelerate the maturity of the debt, and prepayment rebates and penalties. “(13) In any residential mortgage transaction, a statement indicating whether a subsequent purchaser or assignee of the consumer may assume the debt obligation on its original terms and conditions.”. (b) Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b)) is amended to read as follows: “(b) (1) Except as otherwise provided in this chapter, the disclosures required under subsection (a) shall be made before the credit is extended. Except for the disclosures required by subsection (a)(1) of this section, all disclosures required under subsection (a) and any disclosure provided for in subsection (b), (c), or (d) of section 106 shall 15 USC 1605. be conspicuously segregated from all other terms, data, or information provided in connection with a transaction, including any computations or itemization. “(2) In the case of a residential mortgage transaction, as defined in section 103(w), which is also subject to the Real Estate Settlement Ante, p. 176. 12 USC 2601 note. Ante, p. 174. Procedures Act, good faith estimates of the disclosures required under subsection (a) shall be made in accordance with regulations of the Board under section 121(c) before the credit is extended, or shall be delivered or placed in the mail not later than three business days after the creditor receives the consumer’s written application, whichever is earlier. If the disclosure statement furnished within three days of the written application contains an annual percentage rate which is subsequently rendered inaccurate within the meaning of section 107(c), the creditor shall furnish another statement at the Ante, p. 170. time of settlement or consummation.”. (c) Section 128(c) of the Truth in Lending Act (15 U.S.C. 1638(c)) is amended— (1) by inserting “(1)” after “(c)”; (2) by striking out “deferred payment price” and inserting in lieu thereof “total sale price”; and (3) by adding at the end thereof the following new paragraph: “(2) If a creditor receives a request for a loan by mail or telephone without personal solicitation and the terms of financing, including the annual percentage rate for representative amounts of credit, are set forth in the creditor’s printed material distributed to the public, or in the contract of loan or other printed material delivered to the obligor, then the disclosures required under subsection (a) may be made at any time not later than the date the first payment is due.”. (d) (1) Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is hereby repealed. (2) The table of sections at the beginning of chapter 2 of the Truth in Lending Act is amended by striking out the item relating to section 129 and inserting in lieu thereof the following: “129. [Repealed].”. (e) (1) Section 126 of the Truth in Lending Act (15 U.S.C. 1636) is hereby repealed. (2) The table of sections at the beginning of chapter 2 of the Truth in Lending Act is amended by striking out the item relating to section 126 and inserting in lieu thereof the following: “126. [Repealed].”. (f) (1) The table of sections at the beginning of chapter 2 of the Truth in Lending Act is amended by striking out the item relating to section 128 and inserting in lieu thereof the following: “128. Consumer credit not under open end credit plans.”. (2) The section heading for section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended by striking out “sales” and inserting in lieu thereof “consumer credit”. Sec. 615. civil liability (a) Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is amended— (1) in subsection (a)(2)(B), by striking out “in such action” and inserting in lieu thereof “under this subparagraph in any class action or series of class actions arising out of the same failure to comply by the same creditor”; (2) in subsection (a)(3), by inserting “or in any action in which a person is determined to have a right of rescission under section 15 USC 1635. 125” after “liability”; (3) by amending subsections (b), (c), and (d) to read as follows: “(b) A creditor or assignee has no liability under this section or 15 USC 1607, 1611. 15 USC 1631 et seq. 1667 et seq. Ante, p. 171. section 108 or section 112 for any failure to comply with any requirement imposed under this chapter or chapter 5, if within sixty days after discovering an error, whether pursuant to a final written examination report or notice issued under section 108(e)(1) or through the creditor’s or assignee’s own procedures, and prior to the institution of an action under this section or the receipt of written notice of the error from the obligor, the creditor or assignee notifies the person concerned of the error and makes whatever adjustments in the appropriate account are necessary to assure that the person will not be required to pay an amount in excess of the charge actually disclosed, or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. “(c) A creditor or assignee may not be held liable in any action 15 USC 1635. brought under this section or section 125 for a violation of this title if the creditor or assignee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Examples of a bona fide error include, but are not limited to, clerical, calculation, computer malfunction and programing, and printing errors, except that an error of legal judgment with respect to a person’s obligations under this title is not a bona fide error. “(d) When there are multiple obligors in a consumer credit transaction or consumer lease, there shall be no more than one recovery of damages under subsection (a)(2) for a violation of this title.”; (4) in subsection (e), by adding at the end thereof the following new sentence: “This subsection does not bar a person from asserting a violation of this title in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law.”; (5) in subsection (f), by inserting “, section 108(b), section 108(c), 15 USC 1607. Ante, p. 171. section 108(e),” after “this section”; (6) in subsection (g), by adding at the end thereof the following new sentence: “This subsection does not bar any remedy permitted by section 125.”; and 15 USC 1635. (7) by amending subsection (h) to read as follows: “(h) A person may not take any action to offset any amount for which a creditor or assignee is potentially liable to such person under subsection (a)(2) against any amount owed by such person, unless the amount of the creditor’s or assignee’s liability under this title has been determined by judgment of a court of competent jurisdiction in an action of which such person was a party. This subsection does not bar a consumer then in default on the obligation from asserting a violation of this title as an original action, or as a defense or counterclaim to an action to collect amounts owed by the consumer brought by a person liable under this title.”. (b) Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended— (1) by inserting “, including any requirement under section 125,” immediately after “this chapter”; and (2) by adding at the end thereof the following: “In connection with the disclosures referred to in section 127, a creditor shall 15 USC 1637. have a liability determined under paragraph (2) only for failing to comply with the requirements of section 125, section 127(a), or Ante, p. 176. Ante, p. 177. of paragraph (4), (5), (6), (7), (8), (9), or (10) of section 127(b) or for failing to comply with disclosure requirements under State law for any term or item which the Board has determined to be substantially the same in meaning under section 111(a)(2) as any Ante, p. 173. of the terms or items referred to in section 127(a) or any of those paragraphs of section 127(b). In connection with the disclosures referred to in section 128, a creditor shall have a liability 15 USC 1638. determined under paragraph (2) only for failing to comply with the requirements of section 125 or of paragraph (2) (insofar as it requires a disclosure of the ‘amount financed’), (3), (4), (5), (6), or (9) of section 128(a), or for failing to comply with disclosure Ante, p. 178. requirements under State law for any term which the Board has determined to be substantially the same in meaning under section lll(a)(2) as any of the terms referred to in any of those paragraphs of section 128(a). With respect to any failure to make disclosures required under this chapter or chapter 4 or 5 of this title, liability shall be imposed only upon the creditor required to 15 USC 1631 et seq., 1666 et seq., 1667 et seq. Post, p. 182. make disclosure, except as provided in section 131.”. Sec. 616. liability of assignees (a) Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended to read as follows: “§131. Liability of assignees “(a) Except as otherwise specifically provided in this title, any civil 15 USC 1607. action for a violation of this title or proceeding under section 108 which may be brought against a creditor may be maintained against any assignee of such creditor only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement, except where the assignment was involuntary. For the purpose of this section, a violation apparent on the face of the disclosure statement includes, but is not limited to (1) a disclosure which can be determined to be incomplete or inaccurate from the face of the disclosure statement or other documents assigned, or (2) a disclosure which does not use the terms required to be used by this title. “(b) Except as provided in section 125(c), in any action or proceeding by or against any subsequent assignee of the original creditor without knowledge to the contrary by the assignee when he acquires the obligation, written acknowledgement of receipt by a person to whom a statement is required to be given pursuant to this title shall be conclusive proof of the delivery thereof and, except as provided in subsection (a), of compliance with this chapter. This section does not affect the rights of the obligor in any action against the original creditor. “(c) Any consumer who has the right to rescind a transaction under 15 USC 1635. section 125 may rescind the transaction as against any assignee of the obligation.”. (b) Section 115 of the Truth in Lending Act (15 U.S.C. 1614) is hereby repealed. (c) (1) The table of sections at the beginning of chapter 1 of the Truth in Lending Act is amended by striking out the item relating to section 115 and inserting in lieu thereof the following: “115. [Repealed].”. (2) The table of sections at the beginning of chapter 2 of the Truth in Lending Act is amended by striking out the item relating to section 131 and inserting in lieu thereof the following: “131. Liability of assignees.”. Sec. 617. liability of credit cardholder Section 133(a) of the Truth in Lending Act (15 U.S.C. 1643(a)) is amended to read as follows: “(a) (1) A cardholder shall be liable for the unauthorized use of a credit card only if— “(A) the card is an accepted credit card; “(B) the liability is not in excess of $50; “(C) the card issuer gives adequate notice to the cardholder of the potential liability; “(D) the card issuer has provided the cardholder with a description of a means by which the card issuer may be notified of loss or theft of the card, which description may be provided on the face or reverse side of the statement required by section 127(b) or on a separate notice accompanying such statement; “(E) the unauthorized use occurs before the card issuer has been notified that an unauthorized use of the credit card has occurred or may occur as the result of loss, theft, or otherwise; and “(F) the card issuer has provided a method whereby the user of such card can be identified as the person authorized to use it. “(2) For purposes of this section, a card issuer has been notified when such steps as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information have been taken, whether or not any particular officer, employee, or agent of the card issuer does in fact receive such information.”. Sec. 618. dissemination of annual percentage rates (a) Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by adding at the end thereof the following new section: “§ 136. Dissemination of annual percentage rates “(a) The Board shall collect, publish, and disseminate to the public, on a demonstration basis in a number of standard metropolitan statistical areas to be determined by the Board, the annual percentage rates charged for representative types of nonsale credit by creditors in such areas. For the purpose of this section, the Board is authorized to require creditors in such areas to furnish information necessary for the Board to collect, publish, and disseminate such information. “(b) The Board is authorized to enter into contracts or other arrangements with appropriate persons, organizations, or State agencies to carry out its functions under subsection (a) and to furnish financial assistance in support thereof.”. (b) The table of sections contained at the beginning of such chapter is amended by adding at the end thereof the following new item: “136. Dissemination of annual percentage rates.”. Sec. 619. credit advertising (a) Section 143 of the Truth in Lending Act (15 U.S.C. 1662) is amended to read as follows: “§ 143. Advertising of open end credit plans “No advertisement to aid, promote, or assist directly or indirectly the extension of consumer credit under an open end credit plan may set forth any of the specific terms of that plan unless it also clearly and conspicuously sets forth all of the following items: “(1) Any minimum or fixed amount which could be imposed. “(2) In any case in which periodic rates may be used to compute the finance charge, the periodic rates expressed as annual percentage rates. “(3) Any other term that the Board may by regulation require to be disclosed.”. (b) Section 144(d) of the Truth in Lending Act (15 U.S.C. 1664) is amended by striking out paragraphs (1) through (4) thereof, and inserting in lieu thereof the following: “(1) The downpayment, if any. “(2) The terms of repayment. “(3) The rate of the finance charge expressed as an annual percentage rate.”. Sec. 620. correction of billing errors (a) Section 161(b) of the Truth in Lending Act (15 U.S.C. 1666(b)) is amended— (1) by redesignating paragraph (6) as paragraph (7); and (2) by inserting after paragraph (5) the following: “(6) Failure to transmit the statement required under section 127(b) of this Act to the last address of the obligor which has been disclosed to the creditor, unless that address was furnished less than twenty days before the end of the billing cycle for which the statement is required.”. (b) Section 161(c) of the Truth in Lending Act (15 U.S.C. 1666(c)) is amended by inserting “, which may include finance charges on amounts in dispute,” after “of statements of account”. Sec. 621. credit balances (a) Section 165 of the Truth in Lending Act (15 U.S.C. 1666d) is amended to read as follows: “§ 165. Treatment of credit balances “Whenever a credit balance in excess of $1 is created in connection with a consumer credit transaction through (1) transmittal of funds to a creditor in excess of the total balance due on an account, (2) rebates of unearned finance charges or insurance premiums, or (3) amounts otherwise owed to or held for the benefit of an obligor, the creditor shall— “(A) credit the amount of the credit balance to the consumer’s account; “(B) refund any part of the amount of the remaining credit balance, upon request of the consumer; and “(C) make a good faith effort to refund to the consumer by cash, check, or money order any part of the amount of the credit balance remaining in the account for more than six months, except that no further action is required in any case in which the consumer’s current location is not known by the creditor and cannot be traced through the consumer’s last known address or telephone number.”. (b) The table of sections at the beginning of chapter 4 of the Truth in Lending Act is amended by striking out the item relating to section 165 and inserting in lieu thereof the following: “165. Treatment of credit balances.”. Sec. 622. government exemption (a) Section 113 of the Truth in Lending Act (15 U.S.C. 1612) is amended to read as follows: “§113. Effect on governmental agencies “(a) Any department or agency of the United States which administers a credit program in which it extends, insures, or guarantees consumer credit and in which it provides instruments to a creditor which contain any disclosures required by this title shall, prior to the issuance or continued use of such instruments, consult with the Board to assure that such instruments comply with this title. “(b) No civil or criminal penalty provided under this title for any violation thereof may be imposed upon the United States or any department or agency thereof, or upon any State or political subdivision thereof, or any agency of any State or political subdivision. “(c) A creditor participating in a credit program administered, insured, or guaranteed by any department or agency of the United States shall not be held liable for a civil or criminal penalty under this title in any case in which the violation results from the use of an instrument required by any such department or agency. “(d) A creditor participating in a credit program administered, insured, or guaranteed by any department or agency of the United States shall not be held liable for a civil or criminal penalty under the laws of any State (other than laws determined under section 111 to be 15 USC 1610. inconsistent with this title) for any technical or procedural failure, such as a failure to use a specific form, to make information available at a specific place on an instrument, or to use a specific typeface, as required by State law, which is caused by the use of an instrument required to be used by such department or agency.”. (b) The table of sections at the beginning of chapter 1 of the Truth in Lending Act is amended by striking out the item relating to section 113 and inserting in lieu thereof the following: “113. Effect on governmental agencies.”. Sec. 623. oral disclosures (a) Section 146 of the Truth in Lending Act (15 U.S.C. 1665a) is amended to read as follows: “§ 146. Use of annual percentage rate in oral disclosures “In responding orally to any inquiry about the cost of credit, a creditor, regardless of the method used to compute finance charges, shall state rates only in terms of the annual percentage rate, except that in the case of an open end credit plan, the periodic rate also may be stated and, in the case of an other than open end credit plan where a major component of the finance charge consists of interest computed at a simple annual rate, the simple annual rate also may be stated. The Board may, by regulation, modify the requirements of this section or provide an exception from this section for a transaction or class of transactions for which the creditor cannot determine in advance the applicable annual percentage rate.”. (b) The table of sections at the beginning of chapter 3 of the Truth in Lending Act is amended by striking out the item relating to section 146 and inserting in lieu thereof the following: “146. Use of annual percentage rate in oral disclosures.”. Sec. 624. consumer leasing Section 185(b) of the Truth in Lending Act (15 U.S.C. 1667d(b)) is amended by striking out “sections 115,130, and 131” and inserting in lieu thereof “sections 130 and 131”. 15 USC 1640; Ante, p. 182. Sec. 625. effective date (a) Except as provided in section 608(b), the amendments 15 USC 1602 note. Ante, p. 171. made by this title shall take effect upon the expiration of two years after the date of enactment of this title. (b) All regulations, forms, and clauses required to be prescribed under the amendments made by this title shall be promulgated at least one year prior to such effective date. (c) Notwithstanding subsections (a) and (b), any creditor may comply with the amendments made by this title, in accordance with the regulations, forms, and clauses prescribed by the Board, prior to such effective date.

3. 2010

   Consumer Financial Protection Act of 2010

   Pub. L. 111–203 title X § 1100A(2) · 124 Stat. 1376

   Substituted · 15 U.S.C. § 1663(3)

   Pub. L. 111–203 substituted “Bureau” for “Board”

   Source evidence

   Code amendment note
   Par. (3). Pub. L. 111–203 substituted “Bureau” for “Board”.

   Enacted provision · exact public law section
   (2) by 15 USC 1602 et seq. striking “Board” each place that term appears, other than in section 140(d) and sections 105(i) and 108(a), as amended by this section, and inserting “Bureau”;

   Effective date note
   Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

2 of 4 references resolved to an enrolled provision · 2 partial