Alert May 15, 2012

FTC Affirms Consumers’ Rights Under Holder in Due Course Rule

The FTC issued an advisory opinion affirming its interpretation of the holder in due course rule. The rule permits consumers who enter into credit contracts with a seller of goods to assert the same legal claims and defenses against a third party who purchases the credit contract as they would have against the original seller. The advisory opinion, issued in response to a request from the National Consumer Law Center and other consumer protection advocacy groups, clarifies that courts should not limit consumers’ ability to seek affirmative relief only to instances where a rescission right under state law exists.  The NCLC requested the opinion after a number of courts denied relief absent a state law rescission claim. Click here for the press release and here for the advisory opinion.