Truth in Lending Claims Against a Dealership

In this case the dealer allegedly asserted that the dealer submitted a contract for approval after he canceled the transaction.


The dealer cannot present conflicting contracts to the plaintiff for signature. The implementation of the Truth In Lending Act is very straightforward. There is strict liability for any violations. There are no minor or technical violations. Upon a showing of a violation there is the right to statutory damages, recession and actual damages. There is no requirement that the debtor be misled.

We find that the Debtor’s position with respect to the remedies requested is correct. The law clearly holds that TILA must be strictly construed, and that liability must be imposed for any TILA violation, no matter how technical. In re Ralls, 230 B.R. 508, 519 (Bankr. E.D. Pa. 1999)
Indeed, to find a violation of the TILA and/or Regulation Z, we need not conclude that the Debtor was even aware about the information contained in the D/S. It is sufficient that the information in question “be stated … so as to … contradict … the information required by this part to be disclosed.” In re Ralls, 230 B.R. 508 (Bankr. E.D. Pa. 1999).

The fact that the defendant provided multiple varying disclosures for the same transaction inherently violates TILA i.e different down payments, different finance charges. In In re Ralls, 230 B.R. 508, 516 (Bankr. E.D. Pa. 1999) the defendant provided various, varying disclosures to the plaintiff. The court held:

The cardinal principle of the TILA and its Regulations is making sure that [all the documents issued in a given transaction and the disclosure statement] are identical, with the disclosure statement being more clearly worded and perhaps shorter, but providing accurate information in order that the consumer can refer to it as a benchmark in his or her hypothetical ‘shop for credit.’ In re Ralls, 230 B.R. 508, 516 (Bankr. E.D. Pa. 1999).

Thus, we conclude that, absent a statutory defense, the contradictions between the material terms of the D/S provided and the terms agreed upon by the parties in the instant transaction, as reflected in testimony and other documentation, are sufficient to trigger the Debtor’s rescission rights under In re Ralls, 230 B.R. 508 (Bankr. E.D. Pa. 1999).

In the alternative, if the defendant were to argue that the plaintiffs were never “given” the disclosures of the second transaction (it was not disputed by defendants that the disclosures were not handed to the plaintiffs but only shown) so as to avoid liability under transaction number one THEN there were never TILA disclosures ever provided for transaction number two, which is the one that was in effect on the day of the hearing. Once the plaintiff has demonstrated that there is a potential violation of the act, then the burden shifts to the defendant to demonstrate compliance. This has not been done.

It is generally held that a lender bears the burden of providing compliance with the requirements of the TILA. Where the creditor has produced an acknowledged copy of a TILA Disclosure Statement, the burden is on the consumer to prove non-receipt. However, the unrebutted testimony of a debtor may be sufficient to support a finding that the required TILA disclosures were not given, even where a disclosure statement is produced. In re Williams, 232 B.R. 629, 640 (Bankr. E.D. Pa. 1999) aff’d as corrected and remanded sub nom. Williams v. Gelt Fin. Corp., 237 B.R. 590 (E.D. Pa. 1999).

The dealer’s conduct was appalling! There is barely a law they did not violate. The advertisement and the terms contained therein were in violation of New Jersey Law. The dealer had the plaintiff sign two completely separate contracts at the same time. The dealer processed the second transaction when the plaintiff told them to cancel the deal. The dealer interfered with the plaintiff’s contract, which had been assigned to the bank. The dealer lied about the trade value. All of the paperwork says the plaintiff was promised $9,291 for the trade BUT they claim the plaintiff was told $6,500. The dealer admits the contract was reverse-engineered. There was more than consumer fraud; there was admitted fraud, which entitles the plaintiff to punitive damages.

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