Fabricant v. Sears Roebuck

No. 98-1281-CIV-MORENO (S.D. Fla. Mar. 5, 2002); 202 F.R.D. 310 (S.D. Fla. June 29, 2001) ; Clearinghouse Number: 53539

Description

Failure to Disclose That Insurance Purchase Is Not a Factor in Extending Credit Violates Truth in Lending Act

Abstract

The district court held that defendant creditor violated the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601 et seq., because creditor did not clearly disclose that the purchase of insurance was not a factor in the decision to extend credit, failed to disclose separately the cost of property insurance, and did not inform applicants that they might purchase property insurance from others. Plaintiff class of credit card holders, who purchased a group credit insurance package, claims that defendant marketed and sold this insurance by using standard, uniform applications that, in violation of the TILA and state law, did not disclose what was required or obtain appropriate consent . Defendant argued that, under Regulation Z, 12 C.F.R. § 226.4(d)(1)(i), defendant satisfied the TILA if defendant disclosed that insurance was “not required.” The court found summary judgment for plaintiffs on two counts: (1) The plain language of Section 1605(b) required creditor to convey clearly that obtaining insurance would not be “a factor” in the decision to extend credit. To the extent that Regulation Z differed from the statute, it impermissibly altered the disclosure requirements in Section 1605(b). (2) The TILA’s overall statutory scheme and Section 1605(c)’s distinct statutory language requiring creditors to disclose the cost of property insurance supported the conclusion that defendant violated Section 1605(c).

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Docket Date
2002-03-05 00:00:00+00:00