The American Financial Services Association (AFSA) has announced its submission of comments to the Federal Trade Commission (FTC), opposing expanded interpretations of the Holder Rule.
According to AFSA, the FTC's recent interpretation represents a policy shift that could disrupt established industry practices. In its letter, AFSA said that expanding liability to include attorney’s fees departs from the original intent of the Rule, which historically capped liability at the amount paid by the consumer under a finance contract. The association contends that this expanded interpretation exceeds the FTC’s statutory authority and may negatively impact credit pricing and availability for consumers.
In January 2022, the FTC issued an advisory opinion clarifying that the Holder Rule does not prevent state laws from providing for the recovery of attorneys' fees and costs against loan holders. This clarification addressed concerns that some courts had misinterpreted the Rule to preempt state laws authorizing such awards. The FTC emphasized that the Holder Rule does not eliminate any rights a consumer may have under separate state, local, or federal law.
In 2022, in Pulliam v. HNL Automotive Inc., the California Supreme Court ruled that the FTC Holder Rule's recovery limit does not include attorneys' fees when state law provides for such fees against a holder. The court found that the Rule's cap on "recovery hereunder by the debtor" pertains to damages and does not encompass attorneys' fees awarded under state law. This decision has implications for consumer protection, affirming that prevailing consumers can recover full attorneys' fees from holders when authorized by state statutes.
AFSA is a national trade association for the consumer credit industry, representing providers of credit to U.S. consumers, including auto finance, personal loans, and credit cards. Established in 1916, AFSA advocates for access to credit and consumer choice; its members include traditional installment lenders, vehicle finance companies, and other financial services firms.
