NCJ Number
49022
Journal
Washington and Lee Law Review Volume: 35 Issue: 2 Dated: (SPRING 1978) Pages: 367-391
Date Published
1978
Length
25 pages
Annotation
CASES ILLUSTRATING THE COMPLEXITIES THAT HAVE ARISEN UNDER THE FEDERAL TRUTH IN LENDING ACT ARE REVIEWED.
Abstract
THE TRUTH IN LENDING ACT IS DESIGNED TO MAKE VITAL INFORMATION MORE AVAILABLE TO CONSUMERS IN A CLEAR AND MEANINGFUL FORM. HOWEVER, THERE HAVE BEEN PROBLEMS RELATED TO UNCERTAINTY AS TO THE FUNDAMENTAL NATURE AND PURPOSE OF TRUTH-IN-LENDING, SHORTCOMINGS IN THE REGULATION THAT ENFORCES THE ACT, TERMINOLOGY, AND UNREALISTIC REQUIREMENTS. CASE ILLUSTRATIONS DEMONSTRATE THAT THE ATTEMPT TO DEFINE 'TRUTH' IN CLEAR AND MEANINGFUL TERMS HAS BEEN LARGELY A FAILURE, PERHAPS BECAUSE REGULATORS, COURTS, CREDITORS, AND DEBTORS CANNOT REACH A CONSENSUS ON WHAT IS CLEAR AND MEANINGFUL. THE BENEFITS OF TRUTH-IN-LENDING ARE DIFFICULT TO DISCERN. ONE SIDE EFFECT OF TRUTH-IN-LENDING HAS BEEN TO AID THE CREDIT CARD INDUSTRY BY EFFECTIVELY PUTTING SMALL CREDITORS OUT OF BUSINESS. ALTHOUGH TRUTH-IN-LENDING WAS WELL INTENDED, IT APPEARS TO HAVE SERVED AS A TRAP FOR THE CREDITOR, INCREASING THE COST OF CREDIT EXTENSIONS AND ELIMINATING FROM THE CREDIT MARKET THE SMALL CREDIT EXTENDER WHO CANNOT AFFORD THE LEGAL ASSISTANCE NEEDED TO COMPLY WITH THE COMPLEX SUBTLETIES OF THE LAW. ALTHOUGH SOME CONSUMERS HAVE GOTTEN WINDFALLS BECAUSE OF CREDITORS' ERRORS, THIS WAS NOT THE KIND OF CONSUMER BENEFIT CONGRESS INTENDED IN ENACTING THE LAW. BOTH DEBTOR AND CREDITOR WOULD BENEFIT WERE CONGRESS TO LIMIT TRUTH-IN-LENDING DISCLOSURES TO THE ANNUAL PERCENTAGE RATE (TO PERMIT RATE COMPARISON AND SHOPPING), THE TOTAL FINANCE CHARGE (THE COST OF CREDIT), AND THE TOTAL OF PAYMENTS (THE TOTAL BURDEN ON THE CONSUMER). (AUTHOR ABSTRACT MODIFIED--LKM)