Specific Defenses

 

In case a bank comes to know that it has violated provisions of TILA, it can take all of the following steps to avoid liability[i]:

  • Discovering the error before an action is brought against the bank, or before the consumer notifies the bank, in writing, of the error.
  • Notifying the consumer of the error within 60 days of discovery.
  • Making the necessary adjustments to the consumer’s account, also within 60 days of discovery. (The consumer will pay no more than the lesser of the finance charge actually disclosed or the dollar equivalent of the APR actually disclosed.)

When a disclosure error occurs, the bank is not required to re-disclose after a loan has been consummated or an account has been opened.  If the bank corrects a disclosure error by merely re-disclosing required information accurately, without adjusting the consumer’s account, the bank may still be subject to civil liability and an order to reimburse from its regulator.

As per Chapter 4 of TILA, the circumstances under which a bank may avoid liability under the TILA do not apply to violations of the Fair Credit Billing Act.

 


[i] http://www.federalreserve.gov/boarddocs/caletters/2009/0904/09-04_attachment.pdf


Inside Specific Defenses