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TILA Reimbursement Tolerance

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Question: 
If a finance charge is understated on a TIL and restitution needs to be made, is the bank allowed to keep the tolerance, and would you state any pro and con reasons for this?
Answer: 

While this is technically allowable, how are you going to explain to the customer if they ask, "How did you come up with this amount that I'm being reimbursed?" Are you going to say something like: "Well, we originally overcharged you for what we disclosed, and since we're allowed to keep a portion of that overcharge, that's what we're going to do." If so, you'll need to have some really creative PR types in your bank to put a positive spin on that. You may be better off to bite the bullet and make the full restitution, not just to the tolerance level. But consult with legal counsel with expertise in Truth in Lending before making any restitution decision.

First published on BankersOnline.com 4/5/04

First published on 04/05/2004

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