Opinion ID: 330039
Heading Depth: 2
Heading Rank: 4

Heading: Itemization of Finance Charge

Text: 47 The district court also found that Grants violated Conn.Regs. § 36-395-7(c)(8) (A), cf. 12 C.F.R. § 226.8(c)(8)(i), by not itemizing the component parts of the finance charge. Conn.Regs. § 36-395-3(a), cf. 12 C.F.R. § 226.4(a), defines finance charge to include all charges imposed as a condition of the extension of credit. In part II-C above we determined that, one way or the other, Grants did not disclose a charge related to unrebated insurance premiums in add-on contracts. Thus it is obvious that in failing to reveal this charge in such contracts Grants did not indicate all the elements of the finance charge. Indeed, in its brief Grants tacitly concedes this position by arguing only that if insurance premiums are not a part of the finance charge, that charge need not be further described. 48 The district court, however, went further and held that if Grants was correct in its assertion that the finance charge was comprised of but one element, a time-price differential, that element should be spelled out. Grants argues that for a single element finance charge it does not have to identify the component part further. For support it cites a letter from a Board staff attorney written approximately one year after this litigation was instituted, and a Federal Reserve Board Public Information Letter, No. 444, which states that the public should be able to rely upon staff letters even though not approved by the full Board. Even if we disagree with the interpretation expressed in the staff letter, Grants argues that the good faith defense discussed earlier should apply here. For the reasons we have discussed above, this defense is not available to a defendant who has relied on staff letters rather than a rule, regulation, or interpretation thereof by the Board and so is not available here. As to the weight to be given to the letter itself, plaintiffs call to our attention the short shrift a similar staff letter received in Ratner, supra, 329 F.Supp. at 278-79. 49 While we do not have to reach the issue whether a single element finance charge has to be itemized in the case of the add-on contracts, plaintiff Joyce Chapman apparently signed a new account contract in which the insurance purchase was optional within the meaning of Conn.Regs. §§ 36-395-3(a)(5) and (6), cf. 12 C.F.R. § 226.4(a)(5) and (6), and therefore was not part of the finance charge. Thus in her case the finance charge was truly comprised of a single element. But, the question arises, what was that single element? The term finance charge is used to cover a multitude of elements: under Conn.Regs. § 36-395-3(a), cf. 12 C.F.R. § 226.4(a), it can include interest or time-price differentials; service or transaction charges; loan fees, finders fees or points; credit report charges; and insurance charges. There is no way a consumer can tell if the finance charge includes any or all of these elements unless it is spelled out in the contract, and in a way that does not cause confusion. Thus, defendant violated the Truth-in-Lending law by failing to identify the single element finance charge as only a time-price differential. 27 See Johnson v. Associates Finance, Inc., supra, 369 F.Supp. at 1122; Meyers v. Clearview Dodge Sales, Inc., 384 F.Supp. 722, 726 (E.D.La.1974).