I began this Back To Basics odyssey four years ago with the first installment dealing with consumer credit cost disclosure. See Back to Basics, Continued—Consumer Cost Disclosure. Little did I know then that I would still be writing this blog in 2022, nor that I would come full circle to talk about the federal Truth-in-Lending Act (TILA) once again. But here goes.

Truth-in-Lending has been around for my entire legal career—though it was fairly new when I was fairly new. The guiding principle of TILA was to have a disclosure law that addressed explaining consumer financial services in understandable language. Required disclosures were designed to present the most important financing terms of a transaction in a clear, conspicuous and meaningful sequence. Therefore, the terms “Annual Percentage Rate,” Finance Charge,” “Amount Financed,”, Total of Payments,” and “Total Sale Price” were given particular attention.

Another fundamental principle of disclosure was to be that extraneous information should not be included within the disclosure statement, so as not to detract from the prominence of the required disclosures.

The Federal Reserve Board’s Regulation Z contains sample disclosure statement templates that assist creditors in complying with the law.

For years, I have adhered to the principle that calls for staying as close to the sample forms as possible. After all, if a disclosure is attacked as being in violation of the law and regulation, adherence to the sample disclosure is a pretty darn good defense that the disclosure format is in compliance with the law.

However, I have recently been reminded that deviation from the model forms is not always problematic; and, in some cases deviation makes perfect sense.

For example, when preparing disclosure templates to be used by a creditor that offers a variety of financial products, it makes sense to work to achieve uniformity throughout the creditor’s product offerings. This is true even if some of the financial products materially differ from one another.

So, when some of the financial products include collateral, but others do not, or when some of the products can be offered with ancillary credit insurance but others cannot, there is nothing wrong with a presentation that may include what amounts to a negative disclosure. Here are two specific examples:

“Credit Insurance: There is no credit insurance offered by the Creditor in connection with this loan.”

“Security: This loan is unsecured.”

While such disclosures may seem irrelevant to the loan in question, and therefore disclosing superfluous information, I have now come to a different understanding. That is, since collateral and the availability of ancillary products are relevant disclosures, their absence is relevant as well.

Please Note: This is the two hundred-sixth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking Dentons - Consumer Finance Report.