Technical Violations of TILA Extend the Right to Rescind

The remedies under TILA include civil liability and damages. If any required disclosures are not given, the borrower’s right to rescind is extended from three days to three years after the date of consummation of the transaction. (15 U.S.C. § 1635(a) & (f); 12 C.F.R. § 226.23(a)(3) (2006).) Thus, “a single violation of TILA, whether it be substantive or technical, extends a borrower’s period for rescission. [Citations.]” (Wiggins v. Avco Financial Services (D.D.C. 1999) 62 F.Supp.2d 90, 94; see Semar v. Platte Valley Federal S & L Ass’ n (9th Cir. 1986) 791 F.2d 699, 704 [minor technical, as well as major, violations of TILA or Regulation Z entitle the borrower to rescind].) Lenders who fail correctly to notify the borrower of the right to rescind are also liable to the borrower for damages plus costs and attorney fees. (15 U.S.C. § 1640(a)(1), (a)(2)(A) & (a)(3).) Lenders who omit the disclosures under section 1639 are subject to liability in the amount equal to the sum of all finance charges and fees paid by the consumer, unless the failure to comply with the statute is not material. (15 U.S.C. § 1640(a)(4).)

As a consumer protection statute, TILA “is to be liberally construed in favor of borrowers.” (Wiggins v. Avco Financial Services, supra, 62 F.Supp.2d at p. 94; Riggs v. Government Emp. Financial Corp. (9th Cir. 1980) 623 F.2d 68, 71.)

Because TILA is to be construed liberally to effect its remedial purpose of protecting consumers who are inherently at a disadvantage in loan and credit transactions by assuring that they will not be easily misled about the costs of financing (Semar v. Platte Valley Federal S & L Ass’ n, supra, 791 F.2d at p. 705; Wiggins v. Avco Financial Services, supra, 62 F.Supp.2d at p. 94, citing Thomka v. A.Z. Chevrolet, Inc. (3d Cir. 1980) 619 F.2d 246, 248), we are adverse to reading into the statute an implicit basis for terminating consumers’ remedies that would only benefit lenders at the expense of borrowers.

Pac. Shore Funding v. Lozo, 42 Cal. Rptr. 3d 283, 287-288 (App. 2006)