Opinion ID: 1094068
Heading Depth: 2
Heading Rank: 1

Heading: Parrish's TILA claims

Text: The [TILA] has the broad purpose of promoting `the informed use of credit' by assuring `meaningful disclosure of credit terms' to consumers. Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980) (quoting 15 U.S.C. § 1601). Because the TILA is a consumer protection statute which ... is remedial in nature, its disclosure requirements are to be construed liberally in order to best serve Congress' intent. Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir. 1998). In order to carry out its intent to assure meaningful disclosure, Congress has empowered the Board of Governors of the Federal Reserve System to prescribe regulations to carry out the purposes of [the TILA].... [T]hese regulations may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Board are necessary or proper to effectuate the purposes of [the TILA], to prevent circumvention or evasion thereof, or to facilitate compliance therewith. 15 U.S.C. § 1604(a). The implementing regulation for the TILA is known as Regulation Z (12 C.F.R. § 226), and the Board's official interpretations of the TILA and Regulation Z are dispositive unless they are demonstrably irrational. [4] Milhollin, 444 U.S. at 565-68, 100 S.Ct. 790.
Parrish claims that the CIM program violates the TILA because, he contends, the loan agreement  the only document in the hands of the customer after the customer cashes the check attached to the solicitation letter  does not disclose the date of the loan or when the payments on the loan are due. We disagree. With regard to most consumer-credit transactions such as the CIM program, the TILA requires the disclosure of [t]he number, amount, and due dates or period of payments scheduled to repay the total of payments. [5] 15 U.S.C. § 1638(a)(6) (emphasis added). Additionally, Regulation Z requires disclosure of the timing of payments scheduled to repay the obligation. 12 C.F.R. § 226.18(g). The loan agreement provided: The DATE OF THE LOAN shall be and FINANCE CHARGES SHALL BEGIN TO ACCRUE the date the check (Note) is paid by Creditor's bank. FIRST PAYMENT DUE DATE is one month after the Date of the Loan. (Capitalization original.) Parrish contends that this language is insufficient as disclosure under the TILA because it does not provide the exact date the loan commenced and the date the first and subsequent payments are due. Blazer responds by arguing that Regulation Z, as it read at the time Parrish received the solicitation materials for the CIM program, allowed for delayed disclosure of the date of the loan [6] in situations where the loan is commenced without direct, face-to-face solicitation: (g) Mail or telephone orders  delay in disclosures. If a creditor receives a purchase order or a request for an extension of credit by mail, telephone, or any other written or electronic communication without face-to-face or direct telephone solicitation, the creditor may delay the disclosures until the due date of the first payment, if the following information for representative amounts or ranges of credit is made available in written form to the consumer or to the public before the actual purchase order or request: (1) The cash price or the principal loan amount. (2) The total sale price. (3) The finance charge. (4) The annual percentage rate, and if the rate may increase after consummation, the following disclosures: (i) The circumstances under which the rate may increase. (ii) Any limitations on the increase. (iii) The effect of an increase. (5) The terms of repayment. 12 C.F.R. § 226.17(g) (1990)(emphasis added). [7] Blazer argues that the CIM program qualifies as a written request for a loan (given the fact that the loan is initiated by the customer's signing and cashing the check, without face-to-face communication with a representative of Blazer), and that it made delayed disclosures by 1) telephoning CIM program customers to notify them of the date their check cleared Blazer's bank, and 2) mailing letters to its customers within 30 days of the check's clearance to confirm that date. Blazer contends that it would not be possible to give a specific payment-due date in the loan agreement because Blazer cannot, given the nature of the CIM program, be certain when a customer will cash the check. Blazer's contention that the disclosures made through its CIM program are proper under 12 C.F.R. § 226.17(g) appears to be consistent with the Federal Reserve Board's own interpretation of that regulation: Section 226.17(g) allows creditors to defer TILA disclosures when a consumer makes a credit purchase or requests credit by mail, telephone, or any other written or `electronic communication' without face-to-face or direct solicitation by the creditor. The deferral rule predates online or Internet banking; the term `electronic communication' included credit requests by telegraph transmissions and facsimiles. The rationale underlying the deferral is that creditors cannot provide transaction-specific disclosures in written form as required by the regulation at the time of the consumer's purchase or request. In such cases, creditors may delay providing disclosures until the first payment due date, provided certain information has been `made available in written form' before the consumer's request. The interim final rule provides as did the 1999 proposal that creditors offering loan products by electronic communication (for example, those offered on the Internet) may not delay providing disclosures under § 226.17(g). The difficulties in providing disclosures for credit requests by mail or telephone are not present for credit requests received by e-mail or through the Internet. Thus, specific disclosures must be provided before transactions are consummated using electronic communication as defined in § 226.36. The language has been revised from the proposal to clarify that the deferral rule in § 226.17(g) remains available to creditors offering loan products by facsimile machine (as well as mail and telephone) without face-to-face or direct telephone solicitation. Truth in Lending, 66 Fed.Reg. 17,329, 17,333 (March 30, 2001) (to be codified at 12 C.F.R. pt. 226) (emphasis added). Section 226.17(g) allows credit to be offered via mail, telephone, or other electronic means and full TILA disclosures to be deferred as long as a certain number of disclosures are `made available in written form.' The rationale underlying the deferral is that, in some instances, the creditor cannot provide disclosures in the form required by the regulation because of the lack of face to face or direct interaction with the consumer. Because loan products offered by electronic communication (for example, those offered on the Internet) do not appear to pose the same difficulty, the Board believes that this deferral should not apply to electronic disclosures. The Board believes that permitting a deferral would not effectuate the purpose of the TILA to provide consumers with information about credit terms prior to being obligated. Thus, the proposed rule provides that specific disclosures must be provided before consummation of the transaction. Truth in Lending, 63 Fed.Reg. 14,548, 14,549-50 (March 25, 1998) (to be codified at 12 C.F.R. pt. 226) (emphasis added); see also Truth in Lending, 64 Fed.Reg. 49,722, 49,726 (Sept. 14, 1999) (to be codified at 12 C.F.R. pt. 226). Additionally, the Board's interpretation of § 226.18(g), which, as noted above, requires the disclosure of the timing of payments, appears to specifically address and approve of CIM loan programs such as Blazer's: Timing of payments. i. General rule. Section 226.18(g) requires creditors to disclose the timing of payments. To meet this requirement, creditors may list all of the payment due dates. They also have the option of specifying the `period of payments' scheduled to repay the obligation. As a general rule, creditors that choose this option must disclose the payment intervals or frequency, such as `monthly' or `bi-weekly,' and the calendar date that the beginning payment is due. For example, a creditor may disclose that payments are due `monthly beginning on July 1, 1998.' This information, when combined with the number of payments, is necessary to define the repayment period and enable a consumer to determine all of the payment due dates. ii. Exception. In a limited number of circumstances, the beginning-payment date is unknown and difficult to determine at the time disclosures are made. For example, a consumer may become obligated on a credit contract that contemplates the delayed disbursement of funds based on a contingent event, such as the completion of home repairs. Disclosures may also accompany loan checks that are sent by mail, in which case the initial disbursement and repayment dates are solely within the consumer's control. In such cases, if the beginning-payment date is unknown the creditor may use an estimated date and label the disclosure as an estimate pursuant to § 226.17(c). Alternatively, the disclosure may refer to the occurrence of a particular event, for example, by disclosing that the beginning payment is due '30 days after the first loan disbursement.' This information also may be included with an estimated date to explain the basis for the creditor's estimate. See Comment 17(a)(1)-5(iii). Comment 18(g)4., 12 C.F.R. pt. 226, Supp. 1, Subpart C  Closed-End Credit (emphasis added); see also Truth in Lending, 63 Fed.Reg. 16,669, 16,673 (April 6, 1998) (to be codified at 12 C.F.R. pt. 226) (discussing revisions to Comment 18(g)4.). Even under a liberal construction of the provisions of the TILA we cannot hold that the disclosures included in Blazer's CIM program were insufficient under the TILA. Under § 226.17(g) of Regulation Z and the Board's interpretations of that regulation, Blazer's delayed disclosure of the specific date of the commencement of the loan (i.e., when the check is paid by Blazer's bank) was proper. Furthermore, the due date provision in the loan agreement provided: The DATE OF THE LOAN shall be and FINANCE CHARGES SHALL BEGIN TO ACCRUE the date the check (Note) is paid by Creditor's bank. FIRST PAYMENT DUE DATE is one month after the Date of the Loan. (Capitalization original.) This provision is consistent with the Board's interpretation of 12 C.F.R. § 226.18(g) that disclosure may refer to the occurrence of a particular event, for example, by disclosing that the beginning payment is due `30 days after the first loan disbursement.' See Clay v. Johnson, 264 F.3d 744, 747-49 (7th Cir. 2001) (discussing Comment 18(g)4. and the elimination of the prohibition on disclosing the beginning payment date by referring to a specified event). [8]
Parrish also claims that Blazer violated the requirement of the TILA that disclosures reflect[ing] the terms of the legal obligation between the parties are to be given to Parrish in a form that [Parrish] may keep. 12 C.F.R. § 226.17(a)(1), (c)(1). Specifically, Parrish contends that he did not receive a duplicate copy of his signed promissory note, i.e., the signed check Parrish cashed. We find this contention to be without merit. The reverse side of the check attached to the solicitation letter sent to Parrish provides lines for a signature and a date, a sentence cautioning the customer to thoroughly read the contract before you sign it, and the following information: AMOUNT FINANCED...............$ 1,029.62 FINANCE CHARGE.................$ 446.38 TOTAL OF PAYMENTS..............$ 1,476.00 ANNUAL PERCENTAGE RATE............ 25.11 % Repayable in 36 monthly installments of $41.00 each, beginning 30 days from date of loan and then on the same day of each succeeding month until paid. In consideration of monies received as a loan, the undersigned jointly and severally promise(s) to pay to Creditor the Total of payments in monthly installments as shown above and further agree(s) to terms and conditions set forth in the accompanying Loan Agreement and Disclosure Statement (`Agreement'), the provisions of which Agreement are incorporated herein. NOTICE TO CONSUMER: BY SIGNING AND DEPOSITING (OR CASHING) THIS, YOU HAVE AGREED TO REPAY MONIES AS STATED. DO NOT SIGN THIS BEFORE YOU READ IT AND THE AGREEMENT, OR IF EITHER CONTAINS ANY BLANK SPACES. The undersigned acknowledges receipt of a copy both of this instrument (`Note') and the Agreement. (Capitalization original.) Directly above the check, however, this very language (minus the signature line and date line and the cautionary sentence) is repeated below the words BORROWER'S COPY OF NOTE. Therefore, Parrish's argument is actually reduced to the claim that the TILA requires Blazer to provide Parrish with a copy of the note with Parrish's signature. However, neither § 226.17(a)(1) nor § 226.17(c)(1) requires Blazer to provide Parrish with a duplicate copy of the signed note; rather, those provisions require Blazer only to provide Parrish with a copy of the terms of the legal obligation between them, which, as shown above, Blazer has done. [9] Based on the above, we hold that Parrish has not presented substantial evidence tending to show that Blazer violated the TILA. Because there is no genuine issue of material fact, and because Blazer is entitled to a judgment as a matter of law, summary judgment was appropriate.