Charging Debt Purchaser With Consumer Fraud Requires Obvious Fraud By Initial Creditor

A consumer charged American Honda Finance Corp. with violations of the NJ Consumer Fraud Act, NJ Truth in Consumer Contract, Warranty and Notice Act and the Federal Truth in Lending Act when the consumer failed to make payments and Honda attempted to enforce the debt. Honda purchased the debt from and was not the originator of the loan. When the consumer made application for the loan, she was charged a “credit inquiry fee” and, when the suit was filed by Honda, claimed the “credit inquiry fee” was improperly excluded from the finance charge as an “application fee.” The consumer’s claim was that the inclusion of the “credit inquiry fee” incorrectly in the total amount financed instead of the finance charges increased her costs of borrowing money and was fraudulent. The court held that, as the manner in which the fee was charged when the consumer made application was not obvious to subsequent purchasers of the debt. Therefore, Honda, as a subsequent purchaser, could not be charged with violations of the NJ Consumer Fraud Act, NJ Truth in Consumer Contract, Warranty and Notice Act and the Federal Truth in Lending Act on the basis of the fee. If you believe a creditor violated your rights under the Consumer Fraud Act, you should seek experienced legal counsel immediately in order to fully protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.