US Laws, Codes, Statutes & Cases

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[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 15USC1640]

 
                      TITLE 15--COMMERCE AND TRADE
 
                 CHAPTER 41--CONSUMER CREDIT PROTECTION
 
              SUBCHAPTER I--CONSUMER CREDIT COST DISCLOSURE
 
                       Part B--Credit Transactions
 
Sec. 1640. Civil liability


(a) Individual or class action for damages; amount of award; factors 
        determining amount of award

    Except as otherwise provided in this section, any creditor who fails 
to comply with any requirement imposed under this part, including any 
requirement under section 1635 of this title, or part D or E of this 
subchapter with respect to any person is liable to such person in an 
amount equal to the sum of--
        (1) any actual damage sustained by such person as a result of 
    the failure;
        (2)(A)(i) in the case of an individual action twice the amount 
    of any finance charge in connection with the transaction, (ii) in 
    the case of an individual action relating to a consumer lease under 
    part E of this subchapter, 25 per centum of the total amount of 
    monthly payments under the lease, except that the liability under 
    this subparagraph shall not be less than $100 nor greater than 
    $1,000, or (iii) in the case of an individual action relating to a 
    credit transaction not under an open end credit plan that is secured 
    by real property or a dwelling, not less than $200 or greater than 
    $2,000; or
        (B) in the case of a class action, such amount as the court may 
    allow, except that as to each member of the class no minimum 
    recovery shall be applicable, and the total recovery under this 
    subparagraph in any class action or series of class actions arising 
    out of the same failure to comply by the same creditor shall not be 
    more than the lesser of $500,000 or 1 per centum of the net worth of 
    the creditor;
        (3) in the case of any successful action to enforce the 
    foregoing liability or in any action in which a person is determined 
    to have a right of rescission under section 1635 of this title, the 
    costs of the action, together with a reasonable attorney's fee as 
    determined by the court; and
        (4) in the case of a failure to comply with any requirement 
    under section 1639 of this title, an amount equal to the sum of all 
    finance charges and fees paid by the consumer, unless the creditor 
    demonstrates that the failure to comply is not material.

In determining the amount of award in any class action, the court shall 
consider, among other relevant factors, the amount of any actual damages 
awarded, the frequency and persistence of failures of compliance by the 
creditor, the resources of the creditor, the number of persons adversely 
affected, and the extent to which the creditor's failure of compliance 
was intentional. In connection with the disclosures referred to in 
subsections (a) and (b) of section 1637 of this title, a creditor shall 
have a liability determined under paragraph (2) only for failing to 
comply with the requirements of section 1635 of this title, section 
1637(a) of this title, or of paragraph (4), (5), (6), (7), (8), (9), or 
(10) of section 1637(b) of this title or for failing to comply with 
disclosure requirements under State law for any term or item which the 
Board has determined to be substantially the same in meaning under 
section 1610(a)(2) of this title as any of the terms or items referred 
to in section 1637(a) of this title or any of those paragraphs of 
section 1637(b) of this title. In connection with the disclosures 
referred to in subsection (c) or (d) of section 1637 of this title, a 
card issuer shall have a liability under this section only to a 
cardholder who pays a fee described in section 1637(c)(1)(A)(ii)(I) or 
section 1637(c)(4)(A)(i) of this title or who uses the credit card or 
charge card. In connection with the disclosures referred to in section 
1638 of this title, a creditor shall have a liability determined under 
paragraph (2) only for failing to comply with the requirements of 
section 1635 of this title or of paragraph (2) (insofar as it requires a 
disclosure of the ``amount financed''), (3), (4), (5), (6), or (9) of 
section 1638(a) of this title, or for failing to comply with disclosure 
requirements under State law for any term which the Board has determined 
to be substantially the same in meaning under section 1610(a)(2) of this 
title as any of the terms referred to in any of those paragraphs of 
section 1638(a) of this title. With respect to any failure to make 
disclosures required under this part or part D or E of this subchapter, 
liability shall be imposed only upon the creditor required to make 
disclosure, except as provided in section 1641 of this title.

(b) Correction of errors

    A creditor or assignee has no liability under this section or 
section 1607 of this title or section 1611 of this title for any failure 
to comply with any requirement imposed under this part or part E of this 
subchapter, if within sixty days after discovering an error, whether 
pursuant to a final written examination report or notice issued under 
section 1607(e)(1) of this title or through the creditor's or assignee's 
own procedures, and prior to the institution of an action under this 
section or the receipt of written notice of the error from the obligor, 
the creditor or assignee notifies the person concerned of the error and 
makes whatever adjustments in the appropriate account are necessary to 
assure that the person will not be required to pay an amount in excess 
of the charge actually disclosed, or the dollar equivalent of the annual 
percentage rate actually disclosed, whichever is lower.

(c) Unintentional violations; bona fide errors

    A creditor or assignee may not be held liable in any action brought 
under this section or section 1635 of this title for a violation of this 
subchapter if the creditor or assignee shows by a preponderance of 
evidence that the violation was not intentional and resulted from a bona 
fide error notwithstanding the maintenance of procedures reasonably 
adapted to avoid any such error. Examples of a bona fide error include, 
but are not limited to, clerical, calculation, computer malfunction and 
programing, and printing errors, except that an error of legal judgment 
with respect to a person's obligations under this subchapter is not a 
bona fide error.

(d) Liability in transaction or lease involving multiple obligors

    When there are multiple obligors in a consumer credit transaction or 
consumer lease, there shall be no more than one recovery of damages 
under subsection (a)(2) of this section for a violation of this 
subchapter.

(e) Jurisdiction of courts; limitations on actions; State attorney 
        general enforcement

    Any action under this section may be brought in any United States 
district court, or in any other court of competent jurisdiction, within 
one year from the date of the occurrence of the violation. This 
subsection does not bar a person from asserting a violation of this 
subchapter in an action to collect the debt which was brought more than 
one year from the date of the occurrence of the violation as a matter of 
defense by recoupment or set-off in such action, except as otherwise 
provided by State law. An action to enforce a violation of section 1639 
of this title may also be brought by the appropriate State attorney 
general in any appropriate United States district court, or any other 
court of competent jurisdiction, not later than 3 years after the date 
on which the violation occurs. The State attorney general shall provide 
prior written notice of any such civil action to the Federal agency 
responsible for enforcement under section 1607 of this title and shall 
provide the agency with a copy of the complaint. If prior notice is not 
feasible, the State attorney general shall provide notice to such agency 
immediately upon instituting the action. The Federal agency may--
        (1) intervene in the action;
        (2) upon intervening--
            (A) remove the action to the appropriate United States 
        district court, if it was not originally brought there; and
            (B) be heard on all matters arising in the action; and

        (3) file a petition for appeal.

(f) Good faith compliance with rule, regulation, or interpretation of 
        Board or with interpretation or approval of duly authorized 
        official or employee of Federal Reserve System

    No provision of this section, section 1607(b) of this title, section 
1607(c) of this title, section 1607(e) of this title, or section 1611 of 
this title imposing any liability shall apply to any act done or omitted 
in good faith in conformity with any rule, regulation, or interpretation 
thereof by the Board or in conformity with any interpretation or 
approval by an official or employee of the Federal Reserve System duly 
authorized by the Board to issue such interpretations or approvals under 
such procedures as the Board may prescribe therefor, notwithstanding 
that after such act or omission has occurred, such rule, regulation, 
interpretation, or approval is amended, rescinded, or determined by 
judicial or other authority to be invalid for any reason.

(g) Recovery for multiple failures to disclose

    The multiple failure to disclose to any person any information 
required under this part or part D or E of this subchapter to be 
disclosed in connection with a single account under an open end consumer 
credit plan, other single consumer credit sale, consumer loan, consumer 
lease, or other extension of consumer credit, shall entitle the person 
to a single recovery under this section but continued failure to 
disclose after a recovery has been granted shall give rise to rights to 
additional recoveries. This subsection does not bar any remedy permitted 
by section 1635 of this title.

(h) Offset from amount owed to creditor or assignee; rights of 
        defaulting consumer

    A person may not take any action to offset any amount for which a 
creditor or assignee is potentially liable to such person under 
subsection (a)(2) of this section against any amount owed by such 
person, unless the amount of the creditor's or assignee's liability 
under this subchapter has been determined by judgment of a court of 
competent jurisdiction in an action of which such person was a party. 
This subsection does not bar a consumer then in default on the 
obligation from asserting a violation of this subchapter as an original 
action, or as a defense or counterclaim to an action to collect amounts 
owed by the consumer brought by a person liable under this subchapter.

(i) Class action moratorium

                           (1) In general

        During the period beginning on May 18, 1995, and ending on 
    October 1, 1995, no court may enter any order certifying any class 
    in any action under this subchapter--
            (A) which is brought in connection with any credit 
        transaction not under an open end credit plan which is secured 
        by a first lien on real property or a dwelling and constitutes a 
        refinancing or consolidation of an existing extension of credit; 
        and
            (B) which is based on the alleged failure of a creditor--
                (i) to include a charge actually incurred (in connection 
            with the transaction) in the finance charge disclosed 
            pursuant to section 1638 of this title;
                (ii) to properly make any other disclosure required 
            under section 1638 of this title as a result of the failure 
            described in clause (i); or
                (iii) to provide proper notice of rescission rights 
            under section 1635(a) of this title due to the selection by 
            the creditor of the incorrect form from among the model 
            forms prescribed by the Board or from among forms based on 
            such model forms.

            (2) Exceptions for certain alleged violations

        Paragraph (1) shall not apply with respect to any action--
            (A) described in clause (i) or (ii) of paragraph (1)(B), if 
        the amount disclosed as the finance charge results in an annual 
        percentage rate that exceeds the tolerance provided in section 
        1606(c) of this title; or
            (B) described in paragraph (1)(B)(iii), if--
                (i) no notice relating to rescission rights under 
            section 1635(a) of this title was provided in any form; or
                (ii) proper notice was not provided for any reason other 
            than the reason described in such paragraph.

(Pub. L. 90-321, title I, Sec. 130, May 29, 1968, 82 Stat. 157; Pub. L. 
93-495, title IV, Secs. 406, 407, 408(a)-(d), Oct. 28, 1974, 88 Stat. 
1518; Pub. L. 94-222, Sec. 3(b), Feb. 27, 1976, 90 Stat. 197; Pub. L. 
94-240, Sec. 4, Mar. 23, 1976, 90 Stat. 260; Pub. L. 96-221, title VI, 
Sec. 615, Mar. 31, 1980, 94 Stat. 180; Pub. L. 100-583, Sec. 3, Nov. 3, 
1988, 102 Stat. 2966; Pub. L. 103-325, title I, Sec. 153(a), (b), Sept. 
23, 1994, 108 Stat. 2195; Pub. L. 104-12, Sec. 2, May 18, 1995, 109 
Stat. 161; Pub. L. 104-29, Sec. 6, Sept. 30, 1995, 109 Stat. 274.)


                               Amendments

    1995--Subsec. (a)(2)(A)(iii). Pub. L. 104-29 added cl. (iii).
    Subsec. (i). Pub. L. 104-12 added subsec. (i).
    1994--Subsec. (a)(4). Pub. L. 103-325, Sec. 153(a), added par. (4).
    Subsec. (e). Pub. L. 103-325, Sec. 153(b), inserted at end ``An 
action to enforce a violation of section 1639 of this title may also be 
brought by the appropriate State attorney general in any appropriate 
United States district court, or any other court of competent 
jurisdiction, not later than 3 years after the date on which the 
violation occurs. The State attorney general shall provide prior written 
notice of any such civil action to the Federal agency responsible for 
enforcement under section 1607 of this title and shall provide the 
agency with a copy of the complaint. If prior notice is not feasible, 
the State attorney general shall provide notice to such agency 
immediately upon instituting the action. The Federal agency may--
        ``(1) intervene in the action;
        ``(2) upon intervening--
            ``(A) remove the action to the appropriate United States 
        district court, if it was not originally brought there; and
            ``(B) be heard on all matters arising in the action; and
        ``(3) file a petition for appeal.''
    1988--Subsec. (a). Pub. L. 100-583 substituted ``in subsections (a) 
and (b) of section 1637'' for ``in section 1637'' in third sentence and 
inserted provisions limiting liability of card issuer under this section 
to cardholders who pay fee or use credit card or charge card.
    1980--Subsec. (a). Pub. L. 96-221, Sec. 615(b), in introductory text 
inserted provisions respecting applicability of section 1635 of this 
title, and in text following numbered pars. inserted provisions relating 
to disclosures required under sections 1637 and 1638 of this title.
    Subsec. (a)(2)(B). Pub. L. 96-221, Sec. 615(a)(1), substituted 
provisions respecting recovery under this subparagraph in any class 
action or series of class actions, for provisions respecting recovery in 
a class action.
    Subsec. (a)(3). Pub. L. 96-221, Sec. 615(a)(2), inserted provisions 
relating to right of rescission under section 1635 of this title.
    Subsec. (b). Pub. L. 96-221, Sec. 615(a)(3), substituted provisions 
relating to correction of errors within sixty days by a creditor or 
assignee, for provisions relating to correction of errors within fifteen 
days by a creditor.
    Subsec. (c). Pub. L. 96-221, Sec. 615(a)(3), substituted provisions 
relating to liability of a creditor or assignee in any action brought 
under this section or section 1635 of this title, for provisions 
relating to liability of a creditor in any action brought under this 
section.
    Subsec. (d). Pub. L. 96-221, Sec. 615(a)(3), substituted provisions 
relating to liability in transaction or lease involving multiple 
obligors, for provisions relating to liability of subsequent assignees 
original creditor.
    Subsec. (e). Pub. L. 96-221, Sec. 615(a)(4), inserted provisions 
relating to limitations on actions.
    Subsec. (f). Pub. L. 96-221, Sec. 615(a)(5), inserted references to 
section 1607(b), (c), and (e) of this title.
    Subsec. (g). Pub. L. 96-221, Sec. 615(a)(6), inserted provisions 
relating to remedy under section 1635 of this title.
    Subsec. (h). Pub. L. 96-221, Sec. 615(a)(7), substituted provisions 
relating to offset from amounts owed to the creditor or assignee, and 
rights of defaulting consumer, for provisions relating to offset from 
amounts owed to the creditor.
    1976--Subsec. (a). Pub. L. 94-240, Sec. 4(1), inserted ``or E'' 
after ``part D''.
    Subsec. (a)(2)(A). Pub. L. 94-240, Sec. 4(2), designated existing 
provision as cl. (i) and added cl. (ii).
    Subsec. (a)(2)(B). Pub. L. 94-240, Sec. 4(3), substituted ``lesser 
of $500,000'' for ``lesser of $100,000''.
    Subsec. (b). Pub. L. 94-240, Sec. 4(4), inserted ``or part E of this 
subchapter'' after ``this part'' and struck out ``finance'' after 
``required to pay a''.
    Subsec. (f). Pub. L. 94-222 inserted ``or in conformity with any 
interpretation or approval by an official or employee of the Federal 
Reserve System duly authorized by the Board to issue such 
interpretations or approvals under such procedures as the Board may 
prescribe therefor'' after ``by the Board'', and substituted 
``interpretation, or approval'' for ``or interpretation'' before ``is 
amended''.
    Subsec. (g). Pub. L. 94-240, Sec. 4(5), inserted ``or part D or E of 
this subchapter'' after ``this part'', and ``consumer lease'' after 
``consumer loan''.
    1974--Subsec. (a). Pub. L. 93-495, Sec. 408(a), substituted 
provisions setting forth determination of amount of liability of any 
creditor failing to comply with any requirement imposed under part D of 
this subchapter or this part, for provisions setting forth determination 
of amount of liability of any creditor failing to disclose in connection 
with any consumer credit transaction any information required under this 
part to be disclosed to specified persons.
    Subsec. (b). Pub. L. 93-495, Sec. 408(b), inserted ``for any failure 
to comply with any requirement imposed under this part,'' before ``if 
within''.
    Subsec. (c). Pub. L. 93-495, Sec. 408(c), substituted ``subchapter'' 
for ``part''.
    Subsec. (f). Pub. L. 93-495, Sec. 406, added subsec. (f).
    Subsec. (g). Pub. L. 93-495, Sec. 407, added subsec. (g).
    Subsec. (h). Pub. L. 93-495, Sec. 408(d), added subsec. (h).


                    Effective Date of 1980 Amendment

    Amendment by Pub. L. 96-221 effective on expiration of two years and 
six months after Mar. 31, 1980, with all regulations, forms, and clauses 
required to be prescribed to be promulgated at least one year prior to 
such effective date, and allowing any creditor to comply with any 
amendments, in accordance with the regulations, forms, and clauses 
prescribed by the Board prior to such effective date, see section 625 of 
Pub. L. 96-221, set out as a note under section 1602 of this title.


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-240 effective on expiration of one year 
after Mar. 23, 1976, see section 6 of Pub. L. 94-240, set out as an 
Effective Date note under section 1667 of this title.


                    Effective Date of 1974 Amendment

    Amendment by Pub. L. 93-495 effective Oct. 28, 1974, see section 416 
of Pub. L. 93-495, set out as an Effective Date note under section 1665a 
of this title.


          Determination of Liability Prior to October 28, 1974

    Section 408(e) of Pub. L. 93-495 provided that: ``The amendments 
made by sections 406, 407, and 408 [amending this section] shall apply 
in determining the liability of any person under chapter 2 or 4 of the 
Truth in Lending Act [this part or part D of this subchapter], unless 
prior to the date of enactment of this Act [Oct. 28, 1974] such 
liability has been determined by final judgment of a court of competent 
jurisdiction and no further review of such judgment may be had by appeal 
or otherwise.''

                  Section Referred to in Other Sections

    This section is referred to in sections 1610, 1635, 1667d of this 
title; title 12 section 3806.