Consumer Financial Services Alert - September 8, 2009

The Sixth Circuit recently held that a plaintiff is not required to show injury in order to recover statutory damages for willful violations of the Fair Credit Reporting Act. Plaintiff contended that defendant had willfully violated FCRA by failing to adopt reasonable procedures to ensure the maximum possible accuracy of reported consumer information following a change in the Tennessee driver’s license system. The district court dismissed the action, reasoning that plaintiff had failed to allege that she had suffered any injury as a result of the purported violation. The Sixth Circuit reversed, concluding that FCRA’s private right of action provision for willful violations contains no requirement that a plaintiff allege actual injury. The Court relied on statutory text providing for the recovery of either actual damages or statutory damages in the amount of $100 to $1000 in the case of a willful violation, which the Court concluded was an implicit directive that a plaintiff need not allege actual damages to bring a claim. Click here for Beaudry v. TeleCheck Servs., Inc., No. 08-6428 (6th Cir. Aug. 28, 2009).

On August 13th, HUD published FAQs on its 2008 amendment of Regulation X, the Real Estate Settlement Procedure Act’s implementing regulation. The FAQs cover many provisions of the amendment, including when a loan originator must provide a GFE, expiration of the GFE, providing a list of settlement service providers, the changed circumstances re-delivery rule, and completing the GFE and HUD-1/1A. HUD issued revised FAQs on August 19th and again on September 4th. Click here for the FAQs as of September 4th.

The OCC issued a bulletin on the FRB's interim final rule implementing certain provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 that became effective August 20, 2009. Under the rule, creditors must notify customers 45 days in advance of any rate increase or significant changes in credit card account terms. The rule also requires creditors to disclose that their customers have the right to reject those changes. However, under the rule, the new rates or terms can be applied to any transaction that occurs more than 14 days after the notice is provided, even if the customer ultimately rejects the changes. The rule does not require creditors to tell their customers that new terms can be applied during the 45-day period. In the bulletin, the OCC directs national banks to include an additional disclosure to notify consumers of this consequence until the issue is clarified by the FRB. The bulletin contains sample disclosure language. The OCC believes that this additional disclosure will prevent customer confusion, particularly for customers who opt to reject the changes in terms. Click here for the bulletin.