Creditors have been sued under truth in lending claims many times. To combat these lawsuits, creditors developed several defenses, including:
- A showing of a bona fide clerical error
- Proof of good faith reliance on a rule or regulation
- Voluntary correction of the error within 60 days
- Arbitration clauses
How Can One Show a Bona Fide Clerical Error?
To take advantage of the bona fide error defense, a creditor must show that the error was unintentional, and that it occurred despite reasonable maintenance procedures. The error can only be clerical in nature, and courts usually look strictly at maintenance procedures. Although advanced technology to ensure that clerical errors do not happen is not necessary, a system of double-checking and a well-trained staff are required.
How Does One Show Good Faith Reliance On a Rule or Regulation?
This is a very narrow defense that will only be allowed if a creditor conformed with the Federal Reserve Board’s interpretation of a rule that later turned out to be a violation of that rule. The creditor’s interpretation of a rule is irrelevant, although a misinterpretation of the Federal Reserve Board’s interpretation is possible. It is not possible to use this defense if a creditor has made a unilateral mistake in good faith about a rule.
What Is a Voluntary Correction of an Error Within 60 Days?
This is also a defense that applies only to clerical errors in an original disclosure. To use this defense, a creditor must send a corrected disclosure to a consumer specifically stating that the initial disclosure was erroneous, and this corrected disclosure must be sent before the consumer files suit or notifies the creditor in writing of the error.
What Is an Arbitration Clause?
An arbitration clause is a section of the initial contract that allows the creditor to choose where claims will be decided and who will decide them. Creditors have used this defense primarily to prevent class action lawsuits.
Do I Need an Attorney for My Truth In Lending Claim?
Most creditors have become very good at evading truth in lending claims. If you feel you have been wronged, you need to consult with an experienced attorney right away. An attorney can inform your of your rights under the Truth In Lending Act (TILA), and will be able to represent you if you decide to pursue your truth in lending claim in court.