Car dealer’s guide to the Truth in Lending Act

The Federal Truth in Lending Act regulates credit and leasing practices for car dealerships, according to the Federal Trade Commission.

The FTC represents and protects consumers. FTC calls out violations such as false information reported to financing institutions or misleading advertising.

It’s important for car dealers to stay complaint with TILA regulations. But who looks out for the responsible dealers when there’s a dispute over a claim?

Used motor vehicle dealers can sometimes find themselves defendants in a lawsuit when car buyers claim wrongdoing. Patricia E.M. Covington wrote in Used Car Dealer Magazine, “sometimes those lawsuits claim the dealership has violated the federal disclosure laws that apply to the credit sale of vehicles, specifically the Truth in Lending Act and Regulation Z.”

Regulation Z specifically refers to credit practices.

Covington offers a few defense tactics for TILA cases. First, suits have statute of limitations of one year from the date of the occurrence. In addition, TILA protections apply only to people and not corporations.

Furthermore, there are specific limits to amounts financed that affect the status of a TILA claim. There’s also language in Regulation Z that defines finance charges. If the claimant is disputing a fee that is not a finance charge, their case becomes problematic.

Finally, consumers must prove TILA violations caused harm to receive damages.

No defense is foolproof, but the best defense is remaining compliant and keeping diligent records.

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