The Federal Trade Commission (FTC) is seeking input in review of its Holder in Due Course Rule (16 CFR 433) as part of its systematic review of all current FTC rules and guides.
The Holder in Due Course Rule, formally titled “Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses”, preserves consumers’ right to assert the same legal claims and defenses against anyone who purchases, or provides direct loan funding of a credit contract, as they would have against the seller who originally provided the credit. In essence, the credit union, as contract holder, stands in the shoes of the seller.
This is the rule that requires the following notice on your direct loan contracts:
ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF THE GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.
The FTC is seeking comments regarding whether the Rule is still needed, and if any changes to the Rule should be incorporated to improve its benefits to consumers. Credit unions wishing to comment should follow the instructions provided in the link below.
https://www.ftc.gov/system/files/documents/federal_register_notices/2015/11/151125holderrulefrn.pdf
https://www.ftc.gov/news-events/press-releases/2015/11/ftc-seeks-public-input-review-holder-rule
