[Additional materials are posted on the website: http://www.unc.edu/~clif/conslaw.htm ]
 

Introduction: The big picture, 1-4.
 

I. Chapter 4: Truth in lending.
 

WARNING: This material is incomprehensible without reference to the statute and the regulations. Moreover, portions of the chapter utilize problems to force you to use the statute and Reg Z. It is essential that you work through the materials.
 

A. Introduction to the Truth-in-Lending Act.
 

1. Why is there such an Act? Text, 183. Work through the problem on p. 184--yes, do the math!
 

2. The Original Act, the "Simplification Act," and the Importance of Reg Z. Text, 185-88.
 

B. Scope of the Act.
 

1. Who is a creditor? Problems 1-2, pp. 188-89. See §103 of the Act and Reg Z §§ 226.2 and 226.3.
 

2. Are late payments and service charges "finance charges"? Problem 3. §106 of the Act and Reg. Z § 226.4.
 

3. Who is a "consumer" and what are consumer purposes? Problems 4-7. See § 103(h) and § 104 and Reg. Z §§ 226.2 (a)(11) and 226.3(a).

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4. Are all installment payments within the four or more installment rule? Or an extension of credit? Problem 8. Reg Z § 226.2 (a)(14) and (17).

C. Timing of the Disclosure. Text, 190. For "open end" disclosure, see Reg Z §§ 226.5 and 226.6. For closed end disclosures, see §§ 226.17(b) and 226.2(a)(13).
 

D. Content of the Disclosure.

1. Distinguishing the closed-end transaction from the open-end transaction. Pp. 190-91.
 
 
 

2. Specific Requirements for Closed-end Credit Disclosures:

a. What is a "finance charge"? Pp. 191-92. Answer problems 1(a)-(c). Determine whether the transactions involve "finance charges" under the Act and Reg Z § 226.4.
 

b. Calculating the apr in unusual transactions. Is the duration of the loan in Problem 2 two-three weeks or one year? See Reg Z § 226.17(c)(5). If the loan is for the shorter period, the APR will be MUCH higher than the stated 2.4% which assumes a one-year duration.

c. An overview of closed-end disclosure requirements. Work through problems 3 and 4. These are designed to take you through all the elements of Reg Z §§ 226.17 and 226.18. Make the trip. Also consult Model Forms 2, 3 and H-10 and H-12 in Reg Z.

d. Should any portion of the extended payment plan set out in Problem 5 be treated and disclosed as a finance charge?

e. Is disclosure of an item which is prohibited under state law a violation of TIL? Problem 6.

3. Open-end Credit Disclosures

a. The three tiers of disclosure in open-end credit. Text, 195.

b. Distinguishing between open-end and closed end credit; the difference in disclosures and impact on consumers. Problem in text on 195-96 and the Benion v. Bank One and notes, 196-202.

c. Open-end disclosures. Problem 8, p. 203. Consider this problem in light of the requirements of Reg Z §§ 226.5 and 226.6 (skip over 226.5a and 225.5b).

OMIT PROBLEM 9 ON P. 203.
 

E. Leases: The "Consumer Leasing Act," §§ 181-86; Text, 203.
 

1. The risk of the open end lease, text 203-05; Stat, § 182(4)-(5).

2. Lease Terminology, 205.
 

3. Required Disclosures. Analyze the disclosure statement in Problem 1 on pp. 205-06 in light of Reg M §§ 213.3 and 213.4.
 

4. Who is liable? Note 2, Compare Reg M 213.2(h) and Reg Z 226.2(a)(17).
 

5. Comparing the cost of a lease with a purchase option with a straight purchase (and differently structured purchases). Note 3, pp. 206-07.
 

6. Warranty liability under leases. Note 4, p. 207.
 

7. The Early Termination Blues. Note 5, pp. 207-08.
 

8. "Excess" Wear nd Tear. Note 6, 208.
 

F. Rent-to-Own: Transactions that circumvent both truth-in-lending and the Consumer Leasing Act, pp. 208-10.
 

G. Clarity, 210-13.
 

H. Advertising Credit Terms. See generally §§ 142-45 of statute and Reg Z §§ 226.16 and 226.24. Work through the ads on pp. 214-16. Look for the statutory "trigger" terms and whether the ads comply. Look for current newspaper ads (autos are the most common) that violate the provisions and bring in examples.
 

I. Enforcement of the Truth-in-Lending Act. Text at 216-18 and handout remedy summary. Focus on the civil liability provisions in § 130 of the statute. You will find the handout helpful in making your way through the critical cross-references in § 130(a)
 

OMIT PP. 218-19.
 

J. Plain Language Laws, 219-20.
 

K. Some Perspectives on Truth-in-Lending. Text, 220-22.
 

II. Chapter 5. Fair Credit Reporting Act.
 

A. Introduction. 223-28. Focus on needs for the Act, including the limitations of the common law. Note the capsule summary of the FCRA on p. 228.

B. Scope of the Act.
 

1. The concepts of "consumer report" and "consumer reporting agency." Greenway v. Information Dynamics, 228 and notes 1, 2 and 4, pp. 232-35.
 

2. The bearing of the use of the report on the issue of whether it is a consumer report. Prepare problem in n. 6, p. 235 with aid of n.3 on p. 234.
 

3. Other permissible uses for consumer reports. Notes 4, 5, 7 & 8.
 

4. Problems. Prepare problems in notes 9-10, p. 236.
 

C. Obligations of Users of Consumer Reports. FCRA §§606, 615 and text, pp. 236-37. Prepare problems, 237.
 

D. Obligations of Creditors. Text, 238, and cited statutes.
 

E. Obligations of Consumer Reporting Agencies.
 

1. Introduction. Capsule summary, pp. 238-39.
 

2. Is the CRA responsible for accuracy, relevance or completeness of information in consumer reports? The nature of the CRA obligation. Austin v.Bankamerica Service Corp, 239 and notes 1-5, 241 and n.11, p. 257. Compare Koropoulos v. Credit Bureau, p. 242. Prepare notes 1- 4, 250-51.
 

3. Some issues regarding reasonableness of CRA procedures.
 

a. Verification? n. 5, 251-52.
 

b. Update old information? n.6, 252-54.
 

c. Production quotas. n.7, p. 254.
 

D. Different legal standard for FTC actions? n. 8, pp. 254-55.
 

E. Information must bear on the applicant. n.9, p. 255.
 

F. Consumer's right to learn contents of file and sources of Information, n. 10, pp. 255-57.

G. Consumer Remedies. n. 12, p. 257.
 

OMIT PREEMPTION MATERIALS, P. 259.
 

III. Chapter 6. Discrimination in Granting Credit.
 

A. Introduction to ECOA, 260-63. The credit evaluation process; judgmental and credit scoring methods; history of ECOA; summary of Act.
 

1. The reach of the exemption for incidental consumer credit transactions. N. 1, p. 263.
 

2. Drawing some fine lines: permitting "discriminatioin" to determine creditworthiness without using prohibited bases for decision. Work through citations in notes 2 and 3, p. 263.
 

3. Is it discrimination within the meaning of the act to assign a positive value to a prohibited basis, n.4, or to have a different creditor scoring system for men than women, n. 7?
 

4. Special credit programs. N. 5.
 

5. Does the Act make impossible rational credit evaluation? N. 6.
 

6. Does the Act reach advertising policies? Work through problem in n.8.
 

B. The Prohibited Bases.
 

1. Defining Marital Status. Markham v. Colonial Mortgage, 264-69 and work through notes 1 and 2. Compare note 3.
 

2. Permitting cardholder to designate family members as additional card holders. N. 5.
 

3. Requesting information about a spouse; requiring signature of spouse on credit and other documents. Work through note 6.
 

4. Maintaining individual credit status after marriage and change in marital status. What names on credit cards? terminating accounts after change in marital status; applying for separate credit. Work through sub-parts of note 8.

5. Obtaining a credit report on spouse. Note 9.
 

6. Excluding retirement and other benefits from consideration Problem 11, p. 271.
 

7. Special nature of the prohibition regarding age. Note 12.
 

8. Discrimination on grounds of exercise of rights under the CCPA. Note 13.
 

C. Reasons for Adverse Action.
 

1. Why the creditor is required to give reasons. Text, 272-73.
 

2. What is "adverse action"? Work through sub-parts of note 1.
 

3. Contents of the required notice. Note 2.

4. What are sufficient "reasons"? Work through note 3.
 

5. Special problems in giving reasons for adverse action under scoring systems. Note 4.
 

6. Combining the required ECOA notice with the required FCRA notice. See Forms C-1--C-3.
 

D. Enforcement, 262-71.
 

1. An Overview. Text, 279-82.
 

2. Using the "effects" test in litigation. Footnote to Reg B §202.6(a) and Cherry v. Amoco Oil Co., 282-87 and questions and notes 287-89.
 

3. The "Womens' Business Ownership Act of 1988" (amending ECOA §603(a).
 

E. Preemption, 289-90. Take questions.
 

F. Evaluation, 290-91.
 

IV. Chapter 8. Limits on the Price of Credit.
 

A. Introduction, 378-80.
 

B. Judicial interpretation of rate regulation statutes.
 

1. Loan or Forbearance (herein of the "time-price" doctrine), 380-93. Work through notes and problems.
 

2. Principal Amount and Duration of the Loan, 393-98. Work through questions and notes. Keep your eye on how much money has been made available for how long. Note what statutory remedy was available in the Lyle case.
 

C. Cost of the Loan, 398-411. Work through problems and notes. Look for efforts by lender to shift some of its costs to borrowers. Note the statutory remedy in Scali and Martorano.
 

D. Issues regarding the use of a loan broker, n. 6, pp. 411-13 and Culpepper case, 413 and following notes.
 

E. Prepayment and Refinancing, 420-30.
 

F. Remedies, 430-31.
 

G. Open-End Credit, 431-34. Work through notes. See mimeographed example of the methods used to compute the "service" charge in an open end plan as described in Haas.
 

H. Evaluation of laws affecting the price of credit. 434-51.
 

V. Chapter 14.
 

(OMIT Liability of the Franchisor for the Misconduct of the Franchisee.)
 

A. Liability of the Financer for the Misconduct of the Seller.
 

1. Background: The holder-in-due course; the close-connectedness doctrine, 695-700.
 

2. The FTC holder-in-due course rule, 700-02. Work through problems and questions.
 

a. Using the FTC rule in little FTC actions under state law, 702-06.
 

b. The Effectiveness of the Rule, 706-11. Work through problems and questions.
 

3. Evaluating the Abolition of the Holder in Due Course Doctrine. 711-15.
 

B. Special problems from use of credit cards, 715-18. Work through the questions and notes involving the Fair Credit Billing Act.
 

VI. Chapter 11: Coercive Collection Tactics.
 

A. Common law limits, 564-82.
 

B. Statutory Intervention regarding collection practices (including the Fair Debt Collection Practices Act, 582-601.
 

C. The Fair Credit Billing Act, 601-02
 

VII. Chapter 15
 

A. An example of the regulation of specific kinds of transactions affecting consumers: the home solicitation sale. 513-16. Work through the problems under the cited sections of the U3C and the FTC Home Solicitation Rule (in statutory supplement).
 

B. Rescission under the truth-in-lending act in connection with transactions in which the creditor obtains a security interest in the consumer's residence. 730-38. Work through the problems and questions.