CFPB files amicus brief in TILA suit

The CFPB has posted a Bureau Blog article, "Protecting borrowers' control over their money," to announce that the Bureau has filed an amicus (friend-of-the-court) brief in the U.S. Court of Appeals for the Fourth Circuit to defend the Truth in Lending Act consumer protection against the use of "setoff" of a consumer's deposit accounts against the consumer's credit card debt.

In the case before the court (Lyons v. PNC Bank, N.A., No. 22-1943), the borrower held a PNC Bank credit card that could access a home-equity line of credit (HELOC). When the consumer fell behind on his HELOC payments, PNC withdrew several thousand dollars from his PNC deposit accounts to cover that debt. The bank apparently did so without any warning—even though the consumer says he hadn’t authorized the withdrawals, and even though TILA and its longstanding regulations make that practice illegal.

When the consumer sued PNC for violating TILA, the bank incorrectly claimed that it qualified for an exception to the statute. PNC argued that, because the credit card here was tied to a home-equity line of credit, it did not count as a “credit card account” under TILA or the relevant regulations. The CFPB’s amicus brief explains that this misreads TILA and the nearly 50-year history of the relevant regulations. The result would be an exception that Congress didn’t want and that the regulations don’t provide.