Practice Areas

Consumer Rights

TILA

Truth-In-Lending Act (TILA)

Congress enacted the Truth-in-Lending Act to promote informed consumer borrowing. As the Act suggests, TILA requires lenders to accurately disclose the terms of the credit offered and also requires that certain terms be disclosed clearly and conspicuously.

TILA applies to most types of credit, including closed-end credit (such as an auto loan or a mortgage) and open-ended credit (such as a credit card). TILA requirements may vary based on loan type. For example, TILA prohibits lenders from changing the terms of a home equity line of credit; however, changes to credit card agreements are permitted under certain circumstances.

TILA also prohibits lenders from requiring borrowers purchase certain insurance products (e.g., life insurance or disability coverage) as a condition of obtaining credit unless premiums are included in the finance charge. The law places further restrictions on companies’ advertisements relating to the benefits of loans and services.

You may have a TILA claim if your lender:

  • Charged you additional fees that were never properly disclosed
  • Does not apply your payments on the day they are received, hitting you with unwarranted late charges
  • Failed to accurately calculate your annual percentage rate (APR)
  • Changed any terms or requirements relating to your home equity line of credit (HELOC) without your consent

TILA contains many detailed provisions and exclusions. A consumer lawyer may be able to help you determine whether you were the victim of a TILA violation.

CARD Act

Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act):

Following the aftermath of the recent financial crisis, Congress enacted the Credit Card Accountability, Responsibility, and Disclosure Act (an amendment to TILA) to establish fair and transparent practices relating to the extension of credit under an open-ended consumer credit plan. The CARD Act imposes many restrictions and disclosure requirements on credit card companies.

For example, the CARD Act:

  • Prohibits “retroactive rate increases” or increasing the interest rate that applies to a balance you have already incurred on your credit card
  • Restricts the timing of interest rate increases
  • Requires credit card companies provide customers with enhanced disclosures regarding significant changes, such as fee increases
  • Imposes requirements on credit card companies relating to due dates
  • Restricts the expiration of certain gift card

For more information relating to the CARD Act, visit the Federal Reserve’s website, “What You Need to Know: New Credit Card Rules Effective Feb. 22.”

RESPA

Real Estate Settlement Procedures Act (RESPA)

The Real Estate Settlement Procedures Act is a complex consumer protection law that applies to residential real estate transactions. Congress enacted RESPA to mandate certain disclosures so that home purchasers can make better informed decisions and also to prohibit certain unlawful practices that drive up costs for home buyers.

RESPA requires lenders to provide you with various disclosures, including a “good faith estimate” of the interest rate and fees that you will be charged in connection with a mortgage loan within three days of applying for a loan. Until you have a good faith estimate, you may not be charged any fees (except a reasonable credit check fee).

RESPA also makes it illegal for lenders to receive kickbacks from title companies, insurance companies, or other third parties in connection with mortgage loans. RESPA further prohibits certain practices that increase the cost of settlement services, such as requiring a home buyer to purchase title insurance from a particular company as a condition of sale.

In addition, RESPA contains several requirements relating to escrow accounts. Among other things, RESPA imposes reasonable limits on the amount of money that your lender may require you to pay into escrow, and it also requires lenders to make timely payments out of escrow for taxes and insurance when due.

For example, you may have experienced a RESPA violation if your lender:

  • Failed to provide you with a timely good faith estimate
  • Charged you fees at closing that were not disclosed on your good faith estimate or were higher than disclosed
  • Required you to use an affiliated title company
  • Held excessive amounts in escrow or mishandled your escrow funds

For more information about RESPA, you can visit the Department of Housing and Urban Development (HUD) website.

ECOA

Equal Credit Opportunity Act (ECOA)

The Equal Credit Opportunity Act prohibits creditors from engaging in unlawful lending discrimination. Examples of unlawful discrimination include discrimination based on your race, color, religion, national origin, sex, marital status, age, or whether you receive public assistance. For example, creditors may not reject your loan application or impose different terms and conditions on your loan (like a higher interest rate or higher fees) on the basis of these criteria. For more information about the ECOA, you can visit the Federal Trade Commission’s website.

Payday Lender and Small Loan Laws

Payday Lender & Small Loan Laws

A payday loan generally is a short-term, high-interest cash loan, often under $500, which is targeted at borrowers who need money between paychecks. Payday loans are made at stores and via the Internet. A consumer writes a personal check, or signs over electronic access, for the amount borrowed plus the finance charge and receives cash. The lender holds the check until the next payday. To pay a loan, the borrower can redeem the check for cash, allow the check to be deposited at the bank, or (when permitted by law) roll the loan over for another pay period.

Several states have enacted payday lending laws that restrict the amount of interest and/or fees that may be charged to borrowers and provide other protections for borrowers. A helpful summary of these state laws is available on the National Conference of State Legislatures’ website. These restrictions and limitations vary greatly from state to state.

Minnesota’s payday lending law contains several consumer protections. For example, for loans less than $350, Minnesota law caps the fees that may be charged as follows: $5.50 for loans up to $50; 10 percent plus a $5 fee on loans between $50 and $100; 7 percent (minimum of $10) plus a $5 fee on loans between $100 and $250; and 6 percent (minimum of $17.50) plus $5 fee on loans between $250 and $350. The maximum term for these loans is thirty days, and, if the loan is not paid back at that time, the interest rate can increase 2.75 percent for each additional month that the loan remains unpaid.

Minnesota requires all payday lenders operating within the state (including lenders providing loans to Minnesota residents through the Internet) fit certain requirements in order to do business. Payday lenders must obtain a license from the Minnesota Department of Commerce, authorizing them to provide payday loans in the state. Lenders must always provide a written loan agreement, and Minnesota requires specific information—such as the contact information for the Department of Commerce and an itemized schedule of fees and charges—be provided in those agreements.

In addition, the federal government’s newly-created Consumer Financial Protection Bureau (CFPB) is authorized to regulate payday lenders. Although the CFPB has not yet issued any rules, you can keep track of the latest developments at the CFPB by visiting its website.

If you believe that your lender may have violated any of these laws, or engaged in other unfair or predatory lending practices, our consumer law attorneys have taken on some of the nation’s largest banks and may be able to help.