§ 101. Short title
This title may be cited as the Truth in Lending Act.
[Codified to 15 U.S.C. 1601 note]
[Source: Section 101 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 146), effective May 29,
1968]
§ 102. Findings and declaration of purpose
(a) The Congress finds that economic stabilization would be
enhanced and the competition among the various financial institutions
and other firms engaged in the extension of consumer credit would be
strengthened by the informed use of credit. The informed use of credit
results from an awareness of the cost thereof by consumers. It is the
purpose of this title to assure a meaningful disclosure of credit terms
so that the consumer will be able to compare more readily the various
credit terms available to him and avoid the uninformed use of credit,
and to protect the consumer against inaccurate and unfair credit
billing and credit card practices.
(b) The Congress also finds that there has been a recent trend
toward leasing automobiles and other durable goods for consumer use as
an alternative to installment
{{10-31-08 p.6566}}credit sales and that these
leases have been offered without adequate cost disclosures. It is the
purpose of this title to assure a meaningful disclosure of the terms of
leases of personal property for personal, family, or household purposes
so as to enable the lessee to compare more readily the various lease
terms available to him, limit balloon payments in consumer leasing,
enable comparison of lease terms with credit terms where appropriate,
and to assure meaningful and accurate disclosures of lease terms in
advertisement.
[Codified to 15 U.S.C. 1601]
[Source: Section 102 of title I of the Act of May 29, 1968 (Pub.
L. No. 90--321; 82 Stat. 146), effective May 29, 1968, as amended by
section 302 of title III of the Act of October 28, 1974 (Pub. L. No.
93--495; 88 Stat. 1511), effective October 28, 1975; section 2 of the
Act of March 23, 1976 (Pub. L. No. 94--240; 90 Stat. 257), effective
March 23, 1977]
§ 103. Definitions and rules of construction
(a) The definitions and rules of construction set forth in this
section are applicable for the purposes of this title.
(b) The term "Board" refers to the Board of Governors of the
Federal Reserve System.
(c) The term "organization" means a corporation, government
or governmental subdivision or agency, trust, estate, partnership,
cooperative, or association.
(d) The term "person" means a natural person or an
organization.
(e) The term "credit" means the right granted by a creditor
to a debtor to defer payment of debt or to incur debt and defer its
payment.
(f) The term "creditor" refers only to a person who both (1)
regularly extends, whether in connection with loans, sales of property
or services, or otherwise, consumer credit which is payable by
agreement in more than four installments or for which the payment of a
finance charge is or may be required, and (2) is the person to whom the
debt arising from the consumer credit transaction is initially payable
on the face of the evidence of indebtedness or, if there is no such
evidence of indebtedness, by agreement. Notwithstanding the preceding
sentence, in the case of an open-end credit plan involving a credit
card, the card issuer and any person who honors the credit card and
offers a discount which is a finance charge are creditors. For the
purpose of the requirements imposed under chapter 4 and sections
127(a)(5), 127(a)(6), 127(a)(7), 127(b)(1), 127(b)(2), 127(b)(3),
127(b)(8), and 127(b)(10) of chapter 2 of this title, the term
"creditor" shall also include card issuers whether or not the
amount due is payable by agreement in more than four installments or
the payment of a finance charge is or may be required, and the Board
shall, by regulation, apply these requirements to such card issuers, to
the extent appropriate, even though the requirements are by their terms
applicable only to creditors offering open-end credit plans. Any person
who originates 2 or more mortgages referred to in subsection (aa) in
any 12-month period or any person who originates 1 or more such
mortgages through a mortgage broker shall be considered to be a
creditor for purposes of this title. The term "creditor" includes
a private educational lender (as that term is defined in section 140)
for purposes of this title.
(g) The term "credit sale" refers to any sale in which the
seller is a creditor. The term includes any contract in the form of a
bailment or lease if the bailee or lessee contracts to pay as
compensation for use a sum substantially equivalent to or in excess of
the aggregate value of the property and services involved and it is
agreed that the bailee or lessee will become, or for no other or a
nominal consideration has the option to become, the owner of the
property upon full compliance with his obligations under the contract.
(h) The adjective "consumer", used with reference to a credit
transaction, characterizes the transaction as one in which the party to
whom credit is offered or extended is a natural person, and the money,
property, or services which are the subject of the transaction are
primarily for personal, family, or household purposes.
{{10-31-08 p.6567}}
(i) The term "open end credit plan" means a plan under which the
creditor reasonably contemplates repeated transactions, which
prescribes the terms of such transactions, and which provides for a
finance charge which may be computed from time to time on the
outstanding unpaid balance. A credit plan which is an open end credit
plan within the meaning of the preceding sentence is an open end credit
plan even if credit information is verified from time to time.
(j) The term "adequate notice", as used in section 133, means
a printed notice to a cardholder which sets forth the pertinent facts
clearly and conspicuously so that a person against whom it is to
operate could reasonably be expected to have noticed it and understood
its meaning. Such notice may be given to a cardholder by printing the
notice on any credit card, or on each periodic statement of account,
issued to the cardholder, or by any other means reasonably assuring the
receipt thereof by the cardholder.
(k) The term "credit card" means any card, plate, coupon book
or other credit device existing for the purpose of obtaining money,
property, labor, or services on credit.
(l) The term "accepted credit card" means
any credit card which the cardholder has requested and received or has
signed or has used, or authorized another to use, for the purpose of
obtaining money, property, labor, or services on credit.
(m) The term "cardholder" means any person to whom a credit
card is issued or any person who has agreed with the card issuer to pay
obligations arising from the issuance of a credit card to another
person.
(n) The term "card issuer" means any person who issues a
credit card, or the agent of such person with respect to such card.
(o) The term "unauthorized use", as used in section 133,
means a use of a credit card by a person other than the cardholder who
does not have actual, implied, or apparent authority for such use and
from which the cardholder receives no benefit.
(p) The term "discount" as used in section 167 means a
reduction made from the regular price. The term "discount' as used in
section 167 shall not mean a surcharge.
(q) The term "surcharge" as used in section 103 and section
167 means any means of increasing the regular price to a cardholder
which is not imposed upon customers paying by cash, check, or similar
means.
(r) The term "State" refers to any State, the Commonwealth of
Puerto Rico, the District of Columbia, and any territory or possession
of the United States.
(s) The term "agricultural purposes" includes the production,
harvest, exhibition, marketing, transportation, processing, or
manufacture of agricultural products by a natural person who
cultivates, plants, propagates, or nurtures those agricultural
products, including but not limited to the acquisition of farmland,
real property with a farm residence, and personal property and services
used primarily in farming.
(t) The term "agricultural products" includes agricultural,
horticultural, viticultural, and dairy products, livestock, wildlife,
poultry, bees, forest products, fish and shellfish, and any products
thereof, including processed and manufactured products, and any and all
products raised or produced on farms and any processed or manufactured
products thereof.
(u) The term "material disclosures" means the disclosure, as
required by this title, of the annual percentage rate, the method of
determining the finance charge and the balance upon which a
finance charge will be imposed, the amount of the finance charge, the
amount to be financed, the total of payments, the number and amount of
payments, the due dates or periods of payments scheduled to repay
the indebtedness, and the disclosures required by section 129(a).
(v) The term "dwelling" means a residential structure or
mobile home which contains one to four family housing units, or
individual units of condominiums or cooperatives.
(w) The term "residential mortgage transaction" means a
transaction in which a mortgage, deed of trust, purchase money security
interest arising under an installment sales contract, or equivalent
consensual security interest is created or retained against the
consumer's dwelling to finance the acquisition or initial construction
of such dwelling.
(x) As used in this section and section 167, the term "regular
price" means the tag or posted price charged for the property or
service if a single price is tagged or posted, or the price charged for
the property or service when payment is made by use of an
open-end
{{10-31-08 p.6568}}credit plan or a credit
card if either (1) no price is tagged or posted, or (2) two prices are
tagged or posted, one of which is charged when payment is made by use
of an open-end credit plan or a credit card and the other when payment
is made by use of cash, check, or similar means. For purposes of this
definition, payment by check, draft, or other negotiable instrument
which may result in the debiting of an open-end credit plan or a credit
cardholder's open-end account shall not be considered payment made by
use of the plan or the account.
(y) Any reference to any requirement imposed under this title or
any provision thereof includes reference to the regulations of the
Board under this title or the provision thereof in question.
(z) The disclosure of an amount or percentage which is greater than
the amount or percentage required to be disclosed under this title does
not in itself constitute a violation of this title.
(aa)(1) A mortgage referred to in this subsection means a consumer
credit transaction that is secured by the consumer's principal
dwelling, other than a residential mortgage transaction, a reverse
mortgage transaction, or a transaction under an open end credit plan,
if--
(A) the annual percentage rate at consummation of the transaction
will exceed by more than 10 percentage points the yield on Treasury
securities having comparable periods of maturity on the fifteenth day
of the month immediately preceding the month in which the application
for the extension of credit is received by the creditor; or
(B) the total points and fees payable by the consumer at or
before closing will exceed the greater of--
(i) 8 percent of the total loan amount; or
(ii) $400.
(2)(A) After the 2-year period beginning on the effective date of
the regulations promulgated under section 155 of the Riegle Community
Development and Regulatory Improvement Act of 1994, and no more
frequently than biennially after the first increase or decrease under
this subparagraph, the Board may by regulation increase or decrease the
number of percentage points specified in paragraph (1)(A), if the Board
determines that the increase or decrease is--
(i) consistent with the consumer protections against abusive
lending provided by the amendments made by subtitle B of title I of the
Riegle Community Development and Regulatory Improvement Act of 1994;
and
(ii) warranted by the need for credit.
(B) An increase or decrease under subparagraph (A) may not result
in the number of percentage points referred to in subparagraph (A)
being--
(i) less that 8 percentage points; or
(ii) greater than 12 percentage points.
(C) In determining whether to increase or decrease the number of
percentage points referred to in subparagraph (A), the Board shall
consult with representatives of consumers, including low-income
consumers, and lenders.
(3) The amount specified in paragraph (1)(B)(ii) shall be
adjusted annually on January 1 by the annual percentage change in the
Consumer Price Index, as reported on June 1 of the year preceding such
adjustment.
(4) For purposes of paragraph (1)(B), points and fees shall
include--
(A) all items included in the finance charge, except interest or
the time-price differential;
(B) all compensation paid to mortgage brokers;
(C) each of the charges listed in section 106(e) (except an
escrow for future payment of taxes), unless--
(i) the charge is reasonable;
(ii) the creditor receives no direct or indirect compensation;
and
(iii) the charge is paid to a third party unaffiliated with the
creditor; and
(D) such other charges as the Board determines to be
appropriate.
{{10-31-08 p.6569}}
(5) This subsection shall not be construed to limit the rate of
interest or the finance charge that a person may charge a consumer for
any extension of credit.
(bb) The term "reverse mortgage transaction" means a
nonrecourse transaction in which a mortgage, deed of trust, or
equivalent consensual security interest is created against the
consumer's principal dwelling--
(1) securing one or more advances; and
(2) with respect to which the payment of any principal, interest,
and shared appreciation or equity is due and payable (other than in the
case of default) only after--
(A) the transfer of the dwelling;
(B) the consumer ceases to occupy the dwelling as a principal
dwelling; or
(C) the death of the consumer.
[Codified to 15 U.S.C. 1602]
[Source: Section 103 of title I of the Act of May 29, 1968 (Pub.
L. No. 90--321; 82 Stat. 147), effective May 29, 1968, as amended by
section 501 of title V of the Act of October 26, 1970 (Pub. L. No.
91--508; 84 Stat. 1126), effective October 26, 1970; section 303 of
title III of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat.
1511), effective October 28, 1975; section 3(a) of the Act of February
27, 1976 (Pub. L. No. 94--222; 90 Stat. 197), effective February 27,
1976; sections 602, 603, 604, and 612 of title VI of the Act of March
31, 1980 (Pub. L. No. 96--221; 94 Stat. 168, 169, 175, and 176),
effective October 1, 1982; section 102 of title I of the Act of July
27, 1981 (Pub. L. No. 97--25; 95 Stat. 144), effective April 10, 1982;
section 702(a) of title VII of the Act of October 15, 1982 (Pub. L. No.
97--320; 96 Stat. 1538), effective October 1, 1982; sections
152(a)--(d) and 154(a) of title I of the Act of September 23, 1994
(Pub. L. No. 103--325; 108 Stat. 2190 and 2196), effective September
23, 1994; section 1011(b) of title X of the Act of August 14, 2008
(Pub. L. No. 110--315; 122 Stat. 3481), effective August 14,
2008]
§ 104. Exempted transactions
This title does not apply to the following:
(1) Credit transactions involving extensions of credit primarily
for business, commercial, or agricultural purposes, or to government or
governmental agencies or instrumentalities, or to organizations.
(2) Transactions in securities or commodities accounts by a
broker-dealer registered with the Securities and Exchange Commission.
(3) Credit transactions, other than those in which a security
interest is or will be acquired in real property, or in personal
property used or expected to be used as the principal dwelling of the
consumer and other than private education loans (as that term is
defined in section 140(a)), in which the total amount financed exceeds
$25,000.
(4) Transactions under public utility tariffs, if the Board
determines that a State regulatory body regulates the charges for the
public utility services involved, the charges for delayed payment, and
any discount allowed for early payment.
(5) Transactions for which the Board, by rule, determines that
coverage under this title is not necessary to carry out the purposes of
this title.
(6) [Repealed]
(7) Loans made, insured, or guaranteed pursuant to a program
authorized by title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.).
[Codified to 15 U.S.C. 1603]
[Source: Section 104 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 147), effective May 29, 1968, as
amended by section 402 of title IV of the Act of October 28, 1974 (Pub.
L. No. 93--495; 88 Stat. 1517), effective October 28, 1974; section 603
of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat.
169), effective October 1, 1982; and section 701(a) of title VII of the
Act of October 15, 1982 (Pub. L. No. 97--320; 96 Stat. 1538), effective
October 15, 1982; section 2102(a) of title II of the Act of September
30, 1996 (Pub. L. No. 104-208; 110 Stat 3009-398), effective September
30, 1996; section 1022 of title X of the Act of August 14, 2008 (Pub.
L. No. 110--315; 122 Stat. 3488), effective August 14,
2008]
{{10-31-08 p.6570}}
§ 105. Regulations
(a) The Board shall prescribe regulations to carry out the purposes
of this title. Except of the case of a mortgage referred to in section
103(aa), these regulations may contain such classifications,
differentiations, or other provisions, and may provide for such
adjustments and exceptions for any class of transactions, as in the
judgment of the Board are necessary or proper to effectuate the
purposes of this title, to prevent circumvention or evasion thereof, or
to facilitate compliance therewith.
(b) The Board shall publish model disclosure forms and clauses for
common transactions to facilitate compliance with the disclosure
requirements of this title and to aid the borrower or lessee in
understanding the transaction by utilizing readily understandable
language to simplify the technical nature of the disclosures. In
devising such forms, the Board shall consider the use by creditors or
lessors of data processing or similar automated equipment. Nothing in
this title may be construed to require a creditor or lessor to use any
such model form or clause prescribed by the Board under this section. A
creditor or lessor shall be deemed to be in compliance with the
disclosure provisions of this title with respect to other than
numerical disclosures if the creditor or lessor (1) uses any
appropriate model form or clause as published by the Board, or (2) uses
any such model form or clause and changes it by (A) deleting any
information which is not required by this title, or (B) rearranging the
format, if in making such deletion or rearranging the format, the
creditor or lessor does not affect the substance, clarity, or
meaningful sequence of the disclosure.
(c) Model disclosure forms and clauses shall be adopted by the
Board after notice duly given in the Federal Register and an
opportunity for public comment in accordance with section 553 of title
5, United States Code.
(d) Any regulation of the Board, or any amendment or interpretation
thereof, requiring any disclosure which differs from the disclosures
previously required by this chapter, chapter 4, or chapter 5, or by any
regulation of the Board promulgated thereunder shall have an effective
date of that October 1 which follows by at least six months the date of
promulgation, except that the Board may at its discretion take interim
action by regulation, amendment, or interpretation to lengthen the
period of time permitted for creditors or lessors to adjust their forms
to accommodate new requirements or shorten the length of time for
creditors or lessors to make such adjustments when it makes a specific
finding that such action is necessary to comply with the findings of a
court or to prevent unfair or deceptive disclosure practices.
Notwithstanding the previous sentence, any creditor or lessor may
comply with any such newly promulgated disclosure requirements prior to
the effective date of the requirements.
(f) EXEMPTION AUTHORITY.--
(1) IN GENERAL.--The Board may exempt, by regulation,
from all or part of this title any class of transactions, other than
transactions involving any mortgage described in section 103(aa), for
which, in the determination of the Board, coverage under all or part of
this title does not provide a meaningful benefit to consumers in the
form of useful information or protection.
(2) FACTORS FOR CONSIDERATION.--In determining which
classes of transactions to exempt in whole or in part under paragraph
(1), the Board shall consider the following factors and publish its
rationale at the time a proposed exemption is published for comment:
(A) The amount of the loan and whether the disclosures, right of
rescission, and other provisions provide a benefit to the consumers who
are parties to such transactions, as determined by the Board.
(B) The extent to which the requirements of this title
complicate, hinder, or make more expensive the credit process for the
class of transactions.
(C) The status of the borrower, including--
(i) any related financial arrangements of the borrower, as
determined by the Board;
{{4-30-97 p.6570.01}}
(ii) the financial sophistication of the borrower relative to the
type of transaction; and
(iii) the importance to the borrower of the credit, related
supporting property, and coverage under this title, as determined by
the Board;
(D) whether the loan is secured by the principal residence of the
consumer; and
(E) whether the goal of consumer protection would be undermined
by such an exemption.
(g) Waiver for Certain Borrowers.—
(1) IN GENERAL.--The Board, by regulation, may exempt
from the requirements of this title certain credit transactions if--
(A) the transaction involves a consumer--
(i) with an annual earned income of more than $200,000; or
(ii) having net assets in excess of $1,000,000 at the time of the
transaction; and
(B) a waiver that is handwritten, signed, and dated by the
consumer is first obtained from the consumer.
(2) ADJUSTMENTS BY THE BOARD.--The Board, at its
discretion, may adjust the annual earned income and net asset
requirements of paragraph (1) for inflation.
[Codified to 15 U.S.C. 1604]
[Source: Section 105 of title I of the Act of May 29, 1968 (Pub.
L. No. 90--321; 82 Stat. 148), effective May 29, 1968; as amended by
section 605 of title VI of the Act of March 31, 1980 (Pub. L. No.
96--221; 94 Stat. 170), effective October 1, 1982; section 152(e)(2)(A)
of title I of the Act of September 23, 1994 (Pub. L. No. 103--325; 108
Stat. 2194), effective September 23, 1994; sections 2102(b) and 2104 of
title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110
Stat. 3009--399 and 3009--401, respectively), effective September 30,
1996]
§ 106. Determination of finance charge
(a) Except as otherwise provided in this section, the amount of the
finance charge in connection with any consumer credit transaction shall
be determined as the sum of all charges, payable directly or indirectly
by the person to whom the credit is extended, and imposed directly or
indirectly by the creditor as an incident to the extension of credit.
The finance charge does not include charges of a type payable in a
comparable cash transaction. The finance charge shall not include fees
and amounts imposed by third party closing agents (including settlement
agents, attorneys, and escrow and title companies) if the creditor does
not require the imposition of the charges or the services provided and
does not retain the charges. Examples of charges which are included in
the finance charge include any of the following types of charges which
are applicable:
(1) Interest, time price differential, and any amount payable
under a point, discount, or other system of additional charges.
(2) Service or carrying charge.
(3) Loan fee, finder's fee, or similar charge.
(4) Fee for an investigation or credit report.
(5) Premium or other charge for any guarantee or insurance
protecting the creditor against the obligor's default or other credit
loss.
(6) Borrower-paid mortgage broker fees, including fees paid
directly to the broker or the lender (for delivery to the broker)
whether such fees are paid in cash or financed.
(b) Charges or premiums for credit life, accident, or health
insurance written in connection with any consumer credit transaction
shall be included in the finance charge unless
(1) the coverage of the debtor by the insurance is not a factor
in the approval by the creditor of the extension of credit, and this
fact is clearly disclosed in writing to the person applying for or
obtaining the extension of credit; and
{{4-30-97 p.6570.02}}
(2) in order to obtain the insurance in connection with the
extension of credit, the person to whom the credit is extended must
give specific affirmative written indication of his desire to do so
after written disclosure to him of the cost thereof.
(c) Charges or premiums for insurance, written in connection with
any consumer credit transaction, against loss of or damage to property
or against liability arising out of the ownership or use of property,
shall be included in the finance charge unless a clear and specific
statement in writing is furnished by the creditor to the person to whom
the credit is extended, setting forth the cost of the insurance if
obtained from or through the creditor, and stating that the person to
whom the credit is extended may choose the person through which the
insurance is to be obtained.
(d) If any of the following items is itemized and disclosed in
accordance with the regulations of the Board in connection with any
transaction, then the creditor need not include that item in the
computation of the finance charge with respect to that transaction:
(1) Fees and charges prescribed by law which actually are or will
be paid to public officials for determining the existence of or for
perfecting or releasing or satisfying any security related to the
credit transaction.
(2) The premium payable for any insurance in lieu of perfecting
any security interest otherwise required by the creditor in connection
with the transaction, if the premium does not exceed the fees and
charges described in paragraph (1) which would otherwise be payable.
(3) Any tax levied on security instruments or on documents
evidencing indebtedness if the payment of such taxes is a precondition
for recording the instrument securing the evidence of indebtedness.
(e) The following items, when charged in connection with any
extension of credit secured by an interest in real property, shall not
be included in the computation of the finance charge with respect to
that transaction:
(1) Fees or premiums for title examination, title insurance, or
similar purposes.
(2) Fees for preparation of loan-related documents.
(3) Escrows for future payments of taxes and insurance.
(4) Fees for notorizing deeds and other documents.
(5) Appraisal fees, including fees related to any pest
infestation or flood hazard inspections conducted prior to closing.
(6) Credit reports.
(f) TOLERANCES FOR ACCURACY.--In connection with credit
transactions not under an open end credit plan that are secured by real
property or a dwelling, the disclosure of the finance charge and other
disclosures affected by any finance charge--
(1) shall be treated as being accurate for purposes of this title
if the amount disclosed as the finance charge--
(A) does not vary from the actual finance charge by more than
$100; or
(B) is greater than the amount required to be disclosed under
this title; and
(2) shall be treated as being accurate for purposes of section
125 if--
(A) except as provided in subparagraph (B), the amount disclosed
as the finance charge does not vary from the actual finance charge by
more than an amount equal to one-half of one percent of the total
amount of credit extended; or
(B) in the case of a transaction, other than a mortgage referred
to in section 103(aa), which--
(i) is a refinancing of the principal balance then due and any
accrued and unpaid finance charges of a residential mortgage
transaction as defined in section 103(w), or is any subsequent
refinancing of such a transaction; and
(ii) does not provide any new consolidation or new advance;
if the amount disclosed as the finance charge does not vary from
the actual finance charge by more than an amount equal to one percent
of the total amount of credit extended.
[Codified to 15 U.S.C. 1605]
{{4-30-97 p.6570.03}}
[Source: Section 106 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 148), effective May 29, 1968; as
amended by section 606 of title VI of the Act of March 31, 1980 (Pub.
L. No. 96--221; 94 Stat. 170), effective October 1, 1982; sections 2
and 3 of the Act of September 30, 1995 (Pub. L. No. 104--29; 109 Stat.
271 and 272), effective September 30, 1995, except the amendment adding
paragraph (a)(6), which is effective the earlier of: (A) 60 days after
the date on which the Board of Governors of the Federal Reserve System
issues final regulations under paragraph (3) of the Act of September
30, 1995; or (B) September 30, 1996]
§ 107. Determination of annual percentage rate
(a) The annual percentage rate applicable to any extension of
consumer credit shall be determined, in accordance with the regulations
of the Board,
(1) in the case of any extension of credit other than under an
open end credit plan, as
(A) that nominal annual percentage rate which will yield a sum
equal to the amount of the finance charge when it is applied to the
unpaid balances of the amount financed, calculated according to the
actuarial method of allocating payments made on a debt between the
amount financed and the amount of the finance charge, pursuant to which
a payment is applied first to the accumulated finance charge and the
balance is applied to the unpaid amount financed; or
(B) the rate determined by any method prescribed by the Board as
a method which materially simplifies computation while retaining
reasonable accuracy as compared with the rate determined under
subparagraph (A).
(2) in the case of any extension of credit under an open end
credit plan, as the quotient (expressed as a percentage) of the total
finance charge for the period to which it relates divided by the amount
upon which the finance charge for that period is based, multiplied by
the number of such periods in a year.
(b) Where a creditor imposes the same finance charge for balances
within a specified range, the annual percentage rate shall be computed
on the median balance within the range, except that if the Board
determines that a rate so computed would not be meaningful, or would be
materially misleading, the annual percentage rate shall be computed on
such other basis as the Board may by regulation require.
(c) The disclosure of an annual percentage rate is accurate for the
purpose of this title if the rate disclosed is within a tolerance not
greater than one-eighth of 1 per centum more or less than the actual
rate or rounded to the nearest one-fourth of 1 per centum. The Board
may allow a greater tolerance to simplify compliance where irregular
payments are involved.
(d) The Board may authorize the use of rate tables or charts which
may provide for the disclosure of annual percentage rates which vary
from the rate determined in accordance with subsection (a)(1)(A) by not
more than such tolerances as the Board may allow. The
{{2-28-93 p.6571}}Board may not allow a
tolerance greater than 8 per centum of that rate except to simplify
compliance where irregular payments are involved.
(e) In the case of creditors determining the annual percentage rate
in a manner other than as described in subsection (d), the Board may
authorize other reasonable tolerances.
(f) Prior to January 1, 1971, any rate under this title to be
disclosed as a percentage rate may, at the option of the creditor, be
expressed in the form of the corresponding ratio of dollars per hundred
dollars.
[Codified to 15 U.S.C. 1606]
[Source: Section 107 of title I of the Act of May 29, 1968 (Pub.
L. No. 90--321; 82 Stat. 149), effective May 29, 1968; as amended by
section 607 of title VI of the Act of March 31, 1980 (Pub. L. No.
96--221; 94 Stat. 170), effective October 1,
1982]
§ 108. Administrative enforcement
(a) Compliance with the requirements imposed under this title shall
be enforced under
(1) section 8 of the Federal Deposit Insurance Act, in the case
of--
(A) national banks, and Federal branches and Federal agencies of
foreign banks, by the Office of the Comptroller of the Currency;
(B) member banks of the Federal Reserve System (other than
national banks), branches and agencies of foreign banks (other than
Federal branches, Federal agencies, and insured State branches of
foreign banks), commercial lending companies owned or controlled by
foreign banks, and organizations operating under section 25 or 25(a) of
the Federal Reserve Act, by the Board; and
(C) banks insured by the Federal Deposit Insurance Corporation
(other than members of the Federal Reserve System) and insured State
branches of foreign banks, by the Board of Directors of the Federal
Deposit Insurance Corporation;
(2) section 8 of the Federal Deposit Insurance Act, by the
Director of the Office of Thrift Supervision, in the case of a savings
association the deposits of which are insured by the Federal Deposit
Insurance Corporation.
(3) the Federal Credit Union Act, by the Director of the Bureau
of Federal Credit Unions with respect to any Federal credit union.
(4) the Federal Aviation Act of 1958, by the Secretary of
Transportation with respect to any air carrier or foreign air carrier
subject to that Act.
(5) the Packers and Stockyards Act, 1921 (except as provided in
section 406 of that Act), by the Secretary of Agriculture with respect
to any activities subject to that Act.
(6) the Farm Credit Act of 1971, by the Farm Credit
Administration with respect to any Federal land bank, Federal land bank
association, Federal intermediate credit bank, or production credit
association.
(b) For the purpose of the exercise by any agency referred to in
subsection (a) of its powers under any Act referred to in that
subsection, a violation of any requirement imposed under this title
shall be deemed to be a violation of a requirement imposed under that
Act. In addition to its powers under any provision of law specifically
referred to in subsection (a), each of the agencies referred to in that
subsection may exercise, for the purpose of enforcing compliance with
any requirement imposed under this title, any other authority conferred
on it by law.
(c) Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other
Government agency under subsection (a), the Federal Trade Commission
shall enforce such requirements. For the purpose of the exercise by the
Federal Trade Commission of its functions and powers under the Federal
Trade Commission Act, a violation of any requirement imposed under this
title shall be deemed a violation of a requirement imposed under that
Act. All of the functions and powers of the Federal Trade Commission
under the Federal Trade Commission Act are available to the Commission
to enforce compliance by any person with the requirements under this
title, irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests in the Federal Trade Commission
Act.
{{2-28-93 p.6572}}
(d) The authority of the Board to issue regulations under this
title does not impair the authority of any other agency designated in
this section to make rules respecting its own procedures in enforcing
compliance with requirements imposed under this title.
(e)(1) In carrying out its enforcement activities under this
section, each agency referred to in subsection (a) or (c), in cases
where an annual percentage rate or finance charge was inaccurately
disclosed, shall notify the creditor of such disclosure error and is
authorized in accordance with the provisions of this subsection to
require the creditor to make an adjustment to the account of the person
to whom credit was extended, to assure that such person will not be
required to pay a finance charge in excess of the finance charge
actually disclosed or the dollar equivalent of the annual percentage
rate actually disclosed, whichever is lower. For the purposes of this
subsection, except where such disclosure error resulted from a willful
violation which was intended to mislead the person to whom credit was
extended, in determining whether a disclosure error has occurred and in
calculating any adjustment, (A) each agency shall apply (i) with
respect to the annual percentage rate, a tolerance of one-quarter of 1
percent more or less than the actual rate, determined without regard to
section 107(c) of this title, and (ii) with respect to the finance
charge, a corresponding numerical tolerance as generated by the
tolerance provided under this subsection for the annual percentage
rate; except that (B) with respect to transactions consummated after
two years following the effective date of section 608 of the Truth in
Lending Simplification and Reform Act, each agency shall apply (i) for
transactions that have a scheduled amortization of ten years or less,
with respect to the annual percentage rate, a tolerance not to exceed
one-quarter of 1 percent more or less than the actual rate, determined
without regard to section 107(c) of this title, but in no event a
tolerance of less than the tolerances allowed under section 107(c),
(ii) for transactions that have a scheduled amortization of more than
ten years, with respect to the annual percentage rate, only such
tolerances as are allowed under section 107(c) of this title, and (iii)
for all transactions, with respect to the finance charge, a
corresponding numerical tolerance as generated by the tolerances
provided under this subsection for the annual percentage rate.
(2) Each agency shall require such an adjustment when it
determines that such disclosure error resulted from (A) a clear and
consistent pattern or practice of violations, (B) gross negligence, or
(C) a willful violation which was intended to mislead the person to
whom the credit was extended. Notwithstanding the preceding sentence,
except where such disclosure error resulted from a willful violation
which was intended to mislead the person to whom credit was extended,
an agency need not require such an adjustment if it determines that
such disclosure error--
(A) resulted from an error involving the disclosure of a fee or
charge that would otherwise be excludable in computing the finance
charge, including but not limited to violations involving the
disclosures described in sections 106(b), (c) and (d) of this title, in
which event the agency may require such remedial action as it
determines to be equitable, except that for transactions consummated
after two years after the effective date of section 608 of the Truth in
Lending Simplification and Reform Act, such an adjustment shall be
ordered for violations of section 106(b);
(B) involved a disclosed amount which was 10 per centum or less
of the amount that should have been disclosed and (i) in cases where
the error involved a disclosed finance charge, the annual percentage
rate was disclosed correctly, and (ii) in cases where the error
involved a disclosed annual percentage rate, the finance charge was
disclosed correctly; in which event the agency may require such
adjustment as it determines to be equitable;
(C) involved a total failure to disclose either the annual
percentage rate or the finance charge, in which event the agency may
require such adjustment as it determines to be equitable; or
(D) resulted from any other unique circumstance involving clearly
technical and nonsubstantive disclosure violations that do not
adversely affect information provided to the consumer and that have not
misled or otherwise deceived the consumer.
In the case of other such disclosure errors, each agency may require
such an adjustment.
{{4-30-97 p.6573}}
(3) Notwithstanding paragraph (2), no adjustment shall be
ordered--
(A) if it would have a significantly adverse impact upon the
safety or soundness of the creditor, but in any such case, the agency
may--
(i) require a partial adjustment in an amount which does not have
such an impact; or
(ii) require the full adjustment, but permit the creditor to make
the required adjustment in partial payments over an extended period of
time which the agency considers to be reasonable, if (in the case of
an agency referred to in paragraph (1), (2), or (3) of subsection (a)),
the agency determines that a partial adjustment or making partial
payments over an extended period is necessary to avoid causing the
creditor to become undercapitalized pursuant to section 38 of the
Federal Deposit Insurance Act;
(B) the amount of the adjustment would be less than $1, except
that if more than one year has elapsed since the date of the violation,
the agency may require that such amount be paid into the Treasury of
the United States, or (C) except where such disclosure error resulted
from a willful violation which was intended to mislead the person to
whom credit was extended, in the case of an open-end credit plan, more
than two years after the violation, or in the case of any other
extension of credit, as follows:
(i) with respect to creditors that are subject to examination
by the agencies referred to in paragraphs (1) through (3) of section
108(a) of this title, except in connection with violations arising from
practices identified in the current examination and only in connection
with transactions that are consummated after the date of the
immediately preceding examination, except that where practices giving
rise to violations identified in earlier examinations have not been
corrected, adjustments for those violations shall be required in
connection with transactions consummated after the date of the
examination in which such practices were first identified;
(ii) with respect to creditors that are not subject to
examination by such agencies, except in connection with transactions
that are consummated after May 10, 1978; and
(iii) in no event after the later of (I) the expiration of the
life of the credit extension, or (II) two years after the agreement to
extend credit was consummated.
(4)(A) Notwithstanding any other provision of this section, an
adjustment under this subsection may be required by an agency referred
to in subsection (a) or (c) only by an order issued in accordance with
cease and desist procedures provided by the provision of law referred
to in such subsections.
(B) In the case of an agency which is not authorized to conduct
cease and desist proceedings, such an order may be issued after an
agency hearing on the record conducted at least thirty but not more
than sixty days after notice of the alleged violation is served on the
creditor. Such a hearing shall be deemed to be a hearing which is
subject to the provisions of section 8(h) of the Federal Deposit
Insurance Act and shall be subject to judicial review as provided
therein.
(5) Except as otherwise specifically provided in this subsection
and notwithstanding any provision of law referred to in subsection (a)
or (c), no agency referred to in subsection (a) or (c) may require a
creditor to make dollar adjustments for errors in any requirements
under this title, except with regard to the requirements of section
165.
(6) A creditor shall not be subject to an order to make an
adjustment, if within sixty days after discovering a disclosure error,
whether pursuant to a final written examination report or through the
creditor's own procedures, the creditor notifies the person concerned
of the error and adjusts the account so as to assure that such person
will not be required to pay a finance charge in excess of the finance
charge actually disclosed or the dollar equivalent of the annual
percentage rate actually disclosed, whichever is lower.
(7) Notwithstanding the second sentence of subsection (e)(1),
subsection (e)(3)(C)(i), and subsection (e)(3)(C)(ii), each agency
referred to in subsection (a) or (c) shall require an adjustment for an
annual percentage rate disclosure error that exceeds a tolerance of one
quarter of one percent less than the actual rate, determined without
regard to section 107(c)
{{4-30-97 p.6574}}of this title with respect
to any transaction consummated between January 1, 1977, and the
effective date of section 608 of the Truth in Lending Simplification
and Reform Act.
The terms used in paragraph (1) that are not defined in this title
or otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section
1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).
[Codified to 15 U.S.C. 1607]
[Source: Section 108 of title I of the Act of May 29, 1968 (Pub.
L. No. 90--321; 82 Stat. 150), effective May 29, 1968, as amended by
section 403 of title IV of the Act of October 28, 1974 (Pub. L. No.
93--495; 88 Stat. 1517), effective October 28, 1974; section 608 of
title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat.
171), effective March 31, 1980; section 9(n) of the Act of October 4,
1984 (Pub. L. No. 98--443; 98 Stat. 1708), effective October 4, 1984;
section 744(k) of title VII of the Act of August 9, 1989 (Pub. L. No.
101--73; 103 Stat. 439), effective August 9, 1989; section 212(b) of
title II of the Act of December 19, 1991 (Pub. L. No. 102--242; 105
Stat. 2299), effective December 19, 1991; section 1604(a)(5) of title
XVI of the Act of October 28, 1992 (Pub. L. No. 102--550; 106 Stat.
4082), effective December 19, 1991; section 2106 of title II of the Act
of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--402),
effective September 30, 1996]
§ 109. Views of other agencies
In the exercise of its functions under this title, the Board may
obtain upon request the views of any other Federal agency which, in the
judgment of the Board, exercises regulatory or supervisory functions
with respect to any class of creditors subject to this title.
[Codified to 15 U.S.C. 1608]
[Source: Section 109 of title I of the Act of May 28, 1968 (Pub.
L. No. 90--321; 82 Stat. 150), effective May 29,
1968]
§ 110. [Repealed]
[Source: Section 110 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 151), effective May 29, 1968, as
repealed by section 3(b)(1) of the Act of March 23, 1976 (Pub. L. No.
94--239; 90 Stat. 253), effective March 23,
1976]
§ 111. Effect on other laws
(a)(1) Except as provided in subsection (e), chapters 1, 2, and 3
do not annul, alter, or affect the laws of any State relating to the
disclosure of information in connection with credit transactions,
except to the extent that those laws are inconsistent with the
provisions of this title, and then only to the extent of the
inconsistency. Upon its own motion or upon the request of any creditor,
State, or other interested party which is submitted in accordance with
procedures prescribed in regulations of the Board, the Board shall
determine whether any such inconsistency exists. If the Board
determines that a State-required disclosure is inconsistent, creditors
located in that State may not make disclosures using the inconsistent
term or form, and shall incur no liability under the law of that State
for failure to use such term or form, notwithstanding that such
determination is subsequently amended, rescinded, or determined by
judicial or other authority to be invalid for any reason.
(2) Upon its own motion or upon the request of any creditor,
State, or other interested party which is submitted in accordance with
procedures prescribed in regulations of the Board, the Board shall
determine whether any disclosure required under the law of any State is
substantially the same in meaning as a disclosure required under this
title, and such State-required disclosure may not be made in lieu of
the disclosures applicable to certain mortgages under section 129. If
the Board determines that a State-required disclosure is substantially
the same in meaning as a disclosure required by this title, then
creditors located in that State may make such disclosure in compliance
with such
{{4-30-97 p.6574.01}}State law in lieu of the
disclosure required by this title, except that the annual percentage
rate and finance charge shall be disclosed as required by section 122.
(b) Except as provided in section 129, this title does not
otherwise annul, alter or affect in any manner the meaning, scope or
applicability of the laws of any State, including, but not limited to,
laws relating to the types, amounts or rates of charges, or any element
or elements of charges, permissible under such laws in connection with
the extension or use of credit, nor does this title extend the
applicability of those laws to any class of persons or transactions to
which they would not otherwise apply. The provisions of section 129 do
not annul, alter, or affect the applicability of the laws of any State
or exempt any person subject to the provisions of section 129 from
complying with the laws of any State, with respect to the requirements
for mortgages referred to in section 103(aa), except to the extent that
those State laws are inconsistent with any provisions of section 129,
and then only to the extent of the inconsistency.
(c) In any action or proceeding in any court involving a consumer
credit sale, the disclosure of the annual percentage rate as required
under this title in connection with that sale may not be received as
evidence that the sale was a loan or any type of transaction other than
a credit sale.
(d) Except as specified in sections 125, 130, and 166, this title
and the regulations issued thereunder do not affect the validity or
enforceability of any contract or obligation under State or Federal
law.
(e) Certain Credit and Charge Card Application and
Solicitation Disclosure Provisions.--The provisions of subsection
(c) of section 122 and subsections (c), (d), (e), and (f) of section
127 shall supersede any provision of the law of any State relating to
the disclosure of information in any credit or charge card application
or solicitation which is subject to the requirements of section 127(c)
or any renewal notice which is
{{10-31-95 p.6575}}subject to the requirements
of section 127(d), except that any State may employ or establish State
laws for the purpose of enforcing the requirements of such sections.
[Codified to 15 U.S.C. 1610]
[Source: Section 111 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 151), effective May 29, 1968, as
amended by section 307(b) of title III of the Act of October 28, 1974
(Pub. L. No. 93--495; 88 Stat. 1516), effective October 28, 1975;
section 609 of title VI of the Act of March 31, 1980 (Pub. L. No.
96--221; 94 Stat. 173), effective October 1, 1982; section 4 of the Act
of November 3, 1988 (Pub. L. No. 100--583; 102 Stat. 2967), effective
November 3, 1988; section 152(e)(2)(B)--(C) of title I of the Act of
September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2194), effective
September 23, 1994]
§ 112. Criminal liability for willful and knowing violation
Whoever willfully and knowingly
(1) gives false or inaccurate information or fails to provide
information which he is required to disclose under the provisions of
this title or any regulation issued thereunder,
(2) uses any chart or table authorized by the Board under section
107 in such a manner as to consistently understate the annual
percentage rate determined under section 107(a)(1)(A), or
(3) otherwise fails to comply with any requirement imposed under
this title, shall be fined not more than $5,000 or imprisoned not more
than one year, or both.
[Codified to 15 U.S.C. 1611]
[Source: Section 112 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 151), effective May 29,
1968]
§ 113. Effect on governmental agencies
(a) Any department or agency of the United States which administers
a credit program in which it extends, insures, or guarantees consumer
credit and in which it provides instruments to a creditor which contain
any disclosures by this title shall, prior to the issuance or continued
use of such instruments, consult with the Board to assure that such
instruments comply with this title.
(b) No civil or criminal penalty provided under this title for any
violation thereof may be imposed upon the United States or any
department or agency thereof, or upon any State or political
subdivision thereof, or any agency of any State or political
subdivision.
(c) A creditor participating in a credit program administered,
insured, or guaranteed by any department or agency of the United States
shall not be held liable for a civil or criminal penalty under this
title in any case in which the violation results from the use of an
instrument required by any such department or agency.
(d) A creditor participating in a credit program administered,
insured, or guaranteed by any department or agency of the United States
shall not be held liable for a civil or criminal penalty under the laws
of any State (other than laws determined under section 111 to be
inconsistent with this title) for any technical or procedural failure,
such as a failure to use a specific form, to make information available
at a specific place on an instrument, or to use a specific typeface, as
required by State law, which is caused by the use of an instrument
required to be used by such department or agency.
[Codified to 15 U.S.C. 1612]
[Source: Section 113 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 151), effective May 29, 1968; as
amended by section 622 of title VI of the Act of March 31, 1980 (Pub.
L. No. 96--221; 94 Stat. 184), effective October 1,
1982]
§ 114. Reports by Board and Attorney General
Each year the Board shall make a report to the Congress concerning
the administration of its functions under this title, including such
recommendations as the Board deems necessary or appropriate. In
addition, each report of the Board shall include its
assessment
{{10-31-95 p.6576}}of the extent to which
compliance with the requirements imposed under this title is being
achieved.
[Codified to 15 U.S.C. 1613]
[Source: Section 114 of title I of the Act of May 29,
1968 (Pub. L. No. 90--321; 82 Stat. 151), effective May 29, 1968; as
amended by section 610 of title VI of the Act of March 31, 1980 (Pub.
L. No. 96--221; 94 Stat. 174), effective October 1, 1982; section
209(b) of title II of the Act of December 21, 1982 (P.L. No. 97--375;
96 Stat. 1825), effective December 21,
1982]
§ 115. [Repealed]
[Source: Section 115 of title I of the Act of May 29, 1968 (Pub.
L. No. 90--321), as added by section 413(a) of title IV of the Act of
October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1520), effective
October 28, 1974; as repealed by section 616 of title VI of the Act of
March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 182), effective October
1, 1982]
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