Relationship between State Law and Chapter 4 of the TILA (”Credit Billing”)

The relationship between state law and chapter 4 of the TILA involves two parts.  The first part is concerned with correction of billing errors (section 161) and regulation of credit reports (section 162) of the act; the second part addresses the remaining sections of chapter 4.[i]

State law provisions are preempted if they differ from the rights, responsibilities, or procedures in sections 161 or 162.  An exception is made however, for state law that allows a consumer to inquire about an account and requires the bank to respond to such inquiry beyond the time limits provided by TILA.  Such a state law would not be preempted for the extra time period.

State law provisions are preempted if they result in violations of sections 163 through 171 of chapter 4.  For example, a state law that allows the card issuer to offset the consumer’s credit-card indebtedness against funds held by the card issuer would be preempted, since it would violate 12 CFR 226.12(d).  Conversely, a state law that requires periodic statements to be sent more than 14 days before the end of a free-ride period would not be preempted, since no violation of the TILA is involved.

A bank, state, or other interested party may ask the Federal Reserve Board to determine if state law contradicts chapters 1 through 3 of the TILA or Regulation Z. They also may ask if the state law is different from, or would result in violations of, chapter 4 of the TILA and the implementing provisions of Regulation Z.  If the Board determines that a disclosure required by state law (other than a requirement relating to the finance charge, APR, or the disclosures required under section 226.32) is substantially the same in meaning as a disclosure required under the act or Regulation Z, generally creditors in that state may make the state disclosure in lieu of the federal disclosure.




Inside Relationship between State Law and Chapter 4 of the TILA (”Credit Billing”)