Houston Independent Automobile Dealers Association April Issue: Collections | Page 18

Provisions. The assignee cured the error within 60 days of the discovery, as permitted by
CECP, by reducing the rate to 23.99%, crediting the buyer's account for excess interest, and
sending the buyer a cure notice to notify him of the error. After the buyer missed payments on
the contract, the assignee attempted to collect the debt. The buyer sued the assignee for breach
of contract and violations of CECP and the Maryland Consumer Debt Collection Act. The buyer
alleged that the cure was untimely, the cure notice was too vague, the assignee was required to
refund all interest that was collected, and the assignee made false representations in
connection with its collection efforts. The trial court granted summary judgment for the assignee,
and the federal appellate court affirmed with respect to the CECP and breach of contract claims,
but reversed and remanded the MCDCA claim. The appellate court concluded that CECP
requires a creditor to disclose only the interest rate charged, so failing to disclose a rate below
the maximum is not a violation for which liability is imposed. Second, the appellate court
concluded that the 60-day cure period began when the assignee actually discovered the
violation, not when it took assignment of the contract. Third, the appellate court concluded that
the assignee provided a proper cure notice because the notice is only required to identify the
substance of the error and not the actual violation. Next, the appellate court concluded that a
creditor does not forfeit all interest when it cures because such a result would discourage
creditors from self-correcting the error. The appellate court then held that a creditor could not be
liable for breach of contract due to a violation of CECP after a cure because permitting liability
would negate the effect of a cure. Finally, the appellate court reversed the trial court's decision
on the MCDCA claim because a reasonable jury could find that the assignee's conduct abused
or harassed the buyer. See Askew v. HRFC, LLC, 2016 U.S. App. LEXIS 384 (4th Cir. (D. Md.)
January 11, 2016).
Failure to Include Processing Fee Paid at Consummation in Total of Payments Disclosure
Did Not Violate TILA: After selecting a used car for purchase for $17,000, the buyers paid the
dealer $2,400 down and paid an additional $4,675 the following day. They financed the
remaining $10,000 through the dealer. When the buyers failed to make their payments and keep
the vehicle insured, the dealer repossessed it. The buyers sued the dealer, alleging violations of
the Truth in Lending Act for failing to provide them with a disclosure statement in a written form
they could keep prior to the extension of credit and for disclosing the total of payments as
$17,000 rather than $17,075, which was the amount shown in the payment schedule. Both
parties moved for summary judgment, and the federal trial court granted the motion. The court
found that even if the dealer failed to give the buyers a copy of the disclosure statement in a
form they could keep, that violation does not trigger statutory damages under TILA, and the
buyers failed to submit any evidence of actual damages. The court also found that the dealer's
failure to include the $75 processing fee in the total of payments did not violate TILA. The court
reasoned that the required disclosures all relate to the amount of credit that is being extended
(i.e., the amount financed), and the agreement clearly disclosed that the $75 was a separate fee
the buyers paid when they signed the agreement. Note – be very careful with this one; whether
the court correctly decided the issue depends on facts not evident in the court’s opinion. See
Yancy v. America's Preowned Selection, 2016 U.S. Dist. LEXIS 13582 (E.D. Ark. February 4,
2016).
Increasing Car's Price to Cover Inflated Trade-In Allowance Not Hidden Finance Charge
Where Price Applied Equally to Cash and Credit Transactions: A Pennsylvania dealership
advertised a "Cash for Clunkers" program promising potential buyers "at least $4,500" for any
car a buyer offered as a trade-in. A buyer traded in his 1995 Jeep for a 2012 Ford with a cash
price of $29,214. The buyer sued the dealership, claiming, among other things, that the
dealership violated the Truth in Lending Act a