Consumer Financial Services Alert - June 16, 2009

The First Circuit ruled that a borrower’s right to rescind under the Truth in Lending Act was not extended where the failure to include the precise closing date on the rescission notice is the only alleged violation. Plaintiff claimed that his notice was defective as a result of the omitted date, and that his right to rescind should therefore be extended to three years. The First Circuit rejected this argument, holding that mere technical violations of TILA which could not mislead a reasonable borrower, such as the rescission notice here which included the three alternative deadlines which trigger the TILA rescission right, are not grounds for extending the rescission period. The Court found a borrower of average intelligence would not have been confused by the omitted closing date, given the inclusion of the required deadlines. Click here for Melfi v. WMC Mortgage Corp., C.A. No. 09-1066 (1st Cir. June 11, 2009)

The federal banking agencies and the FTC approved for publication in the Federal Register a final rule and guidelines that implement section 312 of the Fair and Accurate Credit Transactions Act. The final rules (1) provide guidelines for furnishers of consumer credit information concerning the accuracy and integrity of the information furnished to consumer reporting agencies, (2) require furnishers of consumer credit information to establish reasonable policies and procedures for implementing the guidelines, and (3) implement a provision of FACTA that allows consumers to directly dispute inaccurate consumer report information. The federal banking agencies and the FTC also issued an advance notice of proposed rulemaking to obtain more information to aid in considering possible additions to the guidelines. Questions the proposal asks include: (1) under what circumstances would a furnisher of consumer credit information be expected to provide an account opening date to a consumer reporting agency to promote the integrity of the information, and (2) whether furnishers of consumer credit information should be expected to provide any other types of information to a consumer reporting agency to promote integrity. Click here for the final rule and guidelines and here for the proposal.

The federal banking agencies and the FTC issued a set of FAQs to help financial institutions, creditors, users of consumer reports, and issuers of credit cards and debit cards comply with Fair and Accurate Credit Transactions Act regulations on identity theft and discrepancies in address changes. The FAQs provide guidance on many aspects of the regulations, including which types of entities and accounts are covered; establishment and administration of an Identity Theft Prevention Program; address validation requirements applicable to card issuers; and the obligations of users of consumer reports upon receiving a notice of address discrepancy. Click here for the FAQs.