III. The Need for Additional Amendments to Truth in Lending There are many additional amendments necessary for Truth in Lending which are not dealt with in Title II of S.914. The recent Report of the National Commission on Consumer Finance contains many recommendations for amendments, most of which are well taken. For example, the subject matter of Section 209 of this bill disclosure of closing costs in real estate transactions - was dealt with by the Commission in details not covered here. In addition the experiences of poverty lawyers with Truth in Lending indicate that there are many more issues in need of clarification. It is apparent for example, that amendments are necessary to clarify the assignee liability under Section 130; to remove the conclusive presumption of Section 131; to extend the period of limitation in which a consumer's claim can be brought; to require disclosure in a foreign language if the transaction was induced or negotiated in that language; to clarify that jurisdiction in the federal courts still exists notwithstanding a state exemption; to clairfy the applicability of Truth in Lending to leasepurchase arrangements; and, to require disclosure in the case of a "side" loan, i.e. a credit transaction used to finance the down payment which is separate from the financing of the balance of the sale itself. In addition, the entire area of disclosure of credit insurance should be examined. So also should the need for private remedies in advertising violations and the The point is that over three years of litigation experience as well as studies by the National Commission on Consumer Finance and consumer organizations such as the Center, have pinpointed the need for a thorough review of Truth in Lending rather than the piece meal approach of Title II of S.914. The better course would appear to be to remove the latter provisions from the bill and undertake proceedings for a separate bill devoted to Truth in Lending alone, during which all aspects of disclosure could be examined. Respectfully Submitted, Brain C Shick Blair C. Shick June 6, 1973 THE ONLY VOLUNTARY ASSOCIATION SERVING THE ENTIRE WORLD OF CONSUMER CREDIT This letter is submitted as a statement on behalf of the International Consumer Credit Association in connection with your Subcommittee's hearings on S. 914, a "Fair Credit Billing Act" which you have introduced, and S. 1630, an alternative proposal introduced jointly by Senators Sparkman and Brock. The ICCA, headquartered in St. Louis, Missouri, has approximately 52,000 members in all 50 states, Puerto Rico and Canada. Our more than 47,000 American members are consumer credit granters of all types, credit bureaus and collection agencies. All of them would be affected by either S. 914 or S. 1530, if enacted. By policy, the International Consumer Credit Association at the present time does not take outright stands for or against any legislation at the federal, state or provincial levels of government in North America. Consequently, we do not wish to comment either pro or con on either of the two measures currently under consideration by your Subcommittee on Consumer Credit, or any provision of either measure, However, we believe that we can make some appropriate observations and requests on behalf of our members without breaching that policy. Our staff has studied both of these measures and have discussed them with our Association's legal counsel. Since most of the content of each measure has been before the 92nd Congress, our members are familiar with what these two bills propose through our publication of the exact text of the bills in that Congress and articles relating to them. We believe therefore that we can reliably speak for our very large membership with regard to the content of this statement and petition to your Subcommittee. 1. In sonraction with the im decia ely preceding hearings on the Report of the National Commission on Consumer Finance, we urged a moratorium on federal legislation and regulation in the consumer credit field until Congress has determined the appropriate role for the federal government in this area. Consequently, in this statement we wish to urge again the need for establishment of a national consumer credit policy. History shows that legislation in our field is never repealed, whether it adequately serves the public interest or not. We believe that both S. 914 & S. 1630 take the federal government on a splinter, piecemeal basis into the sphere of legislation and regulation that is regarded as a responsibility of the states. FORMERLY NATIONAL RETAIL CREDIT ASSOCIATION-FOUNDED 1912 Hon. William Proxmire May 17, 1973 2. Both proposed bills would amend the federal Truth in Lending Act and thereby the federal Consumer Credit Protection Act. Both reflect inconsistencies in those laws which Congress should consider. Some portions of those laws were intended to legislate in interstate commerce alone, particularly the Fair Credit Reporting Act, while other portions were intended to cover all commerce. We believe that federal policy in our industry should at least be consistent. 3. Since enactment of the Truth in Lending Act and the Consumer Credit Protection Act, all agencies responsible for compliance and enforcement have reported an exceedingly high level of voluntary compliance by all segments of the consumer credit industry. Willingness to observe the law, both in letter and spirit, has not been the result of threat of either agency action or civil liability suits. But since the Truth in Lending Act became effective, many banks and retailers in our industry have been harassed by class action consumer suits which allege at most technical violation of the law. In no instance has there been an allegation of damage to consumers individually or as a class. These suits are always filed by a few individuals on behalf of very large numbers of consumers who are deprived of the right to determine whether they wish to be parties to such suits or not. Yet despite the demonstrated lack of need for authorization of such consumer class action suits and their injustice to both consumers and credit granters, both S. 914 and S. 1630 propose to authorize them. Consequently, we believe that it is appropriate for us to raise the question of legislative "overkill." 4. We petition the Subcommittee on Consumer Credit to seek advice of the Senate Judiciary Committee on the constitutionality of each provision of both S. 914 and S. 1630 before taking further action with regard to either measure. At the same time, we believe consideration should be given to the whole federal Consumer Credit Protection Act from a constitutional standpoint, since there seems to have been a lack of consideration of this when the original measure and subsequent amendments were before both the House and the Senate. The International Consumer Credit Association believes that it reliably reflects a general concern among its membership with regard to a trend, both at the federal and state levels of government in efforts to increase consumer protection in consumer credit transactions, to make the "end justify the means." We believe that our members are in sympathy with the need for improving consumer protections in consumer credit transactions through pragmatic legislative solutions to consumer problems, i.e., legislation which works, but we also are aware that many well-meaning proposals fail to consider constitutional restrictions. We urge greater awareness of the need to preserve traditional ideals in attempting to deal with transitory and temporary consumer problems and disputes between private parties. In closing, we point out that some aspects of this legislation tends to regard certain terms and conditions of credit which are less favorable to consumers than are available from other creditors as "unfair." If public policy is shaped on the basis of such a philosophy, competition will be throttled through legislative standardization, or credit to many consumers will be withdrawn. Respectfully submitted, James A. Ambron JAMES A. AMBROSE The United States Savings and Loan League appreciates the By way of introduction, the United States Savings and Loan The League offers the following recommendations to 1. The League recommends a maximum liability of $25,000 for Truth-in-Lending violations in class action suits and removal of the 1 percent of creditor's net worth from the statute. 2. "Good Faith" Compliance (S. 914, Section 206; The League endorses this provision that permits a lender to introduce evidence of "good faith" in defending class action suits. THE AMERICAN HOME - THE SAFEGUARD OF AMERICAN LIBERTIES |