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Truth in Lending Act
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| Dodd-Frank Act | |
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The Truth in Lending Act (TILA) was a federal financial regulation law passed in 1968. According to the Office of the Comptroller of the Currency, the act was intended to promote accurate credit billing and credit card practices. TILA mandated that all consumer lenders disclose to borrowers the annual percentage rate, or APR, of loans. TILA also required lenders to provide consumers with loan cost information, including the length of the loan and total costs, and mandated that loans covered under the act be subject to a three-day period during which a customer could back out of the loan process. The act granted regulatory authority to the Federal Reserve Board. This authority was transferred to the Consumer Financial Protection Bureau in July 2011 as part of the Dodd-Frank Act.[1][2][3]
Legislative history
The Truth in Lending Act started as Title I of the Consumer Credit Protection Act. This act was introduced in the United States Senate by Senator William Proxmire (D) in 1967. The Senate voted to approve the bill 92-0 in July 1967. The United States House of Representatives passed an amended version of the bill in February 1968 in a vote of 383-4. The Senate agreed to the House amendments, and the act was signed into law by President Lyndon B. Johnson on May 29, 1968. The passage of the Dodd-Frank Act transferred the authority to implement the statutes of Title I to the Consumer Financial Protection Bureau.[4][5][6]
Components
TILA mandated that the Annual Percentage Rate (APR) calculation be provided to consumers by lenders. APR is a percentage representing the actual yearly interest rate and costs of fees involved in a loan. Before the passage of TILA, lenders were permitted to present loan information in a variety of formats. According to the Office of the Comptroller of the Currency, this made it difficult for consumers to accurately understand the terms of their loans or to compare loans, since they were often presented in different formats. While the act standardized how lenders could present the terms of loans, it did not mandate how much interest a lender could charge.[6]
TILA also established a right of rescission for borrowers. This provision granted borrowers three days to reconsider and back out of the loan process without any cost. According to the Office of the Comptroller of the Currency, this right was introduced in response to high-pressure sales tactics used by some lenders.[7]
Fair Credit Billing Act
The Fair Credit Billing Act (FCBA) was passed in 1974 as an amendment to TILA. The FCBA permitted consumers to send written notice to a creditor informing the creditor of an error in the creditor's billing (e.g., calculation errors, incorrect amounts, or unauthorized charges not made by the customer). The law required that such notices be sent within 60 days of the statement date of the bill. The law mandated that a creditor acknowledge receipt of the notice within 30 days, and, within 90 days, investigate and make corrections to the error or respond to the notice to inform the customer of the reasons for the creditor's disputation of the error.[8]
See also
External links
Footnotes
- ↑ Office of the Comptroller of the Currency, "Truth in Lending," accessed September 29, 2016
- ↑ Consumer Finance Protection Board, "Truth in Lending Act," accessed September 29, 2016
- ↑ Investopedia, "Truth In Lending Act - TILA," accessed September 29, 2016
- ↑ GovTrack, "S. 5, Truth-in-Lending Act," accessed February 9, 2017
- ↑ GovTrack, "H.R. 11601," accessed February 9, 2017
- ↑ 6.0 6.1 Consumer Financial Protection Bureau, "TILA," accessed February 9, 2017
- ↑ Office of the Comptroller of the Currency, "OCC: Truth in Lending," accessed February 9, 2017
- ↑ Federal Trade Commission, "Disputing Credit Card Charges," accessed February 15, 2017
