Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC seeks comments on Holder Rule, (Nov 30, 2015)

By Charles A. Menke, J.D.

The FTC is requesting public comment regarding the efficiency, costs, benefits, and impact of its Holder Rule, formally entitled the “Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses,” which protects consumers when merchants sell a consumer’s credit contract to other lenders. The request is part of the agency’s systematic review of all current FTC rules and guides, an accompanying release stated. Comments are due by February 12, 2016.

Holder Rule. In 1975, the FTC promulgated the Holder Rule, which requires consumer credit contracts to include language to the effect that any holder of the contract is subject to all claims and defenses that the debtor could assert against the seller of the goods or services obtained under the contract. A creditor or assignee of the contract is therefore subject to any claims or defenses that the consumer could assert against the seller.

“Under the rule, consumers can cite a seller’s misconduct in order to defend themselves against a creditor’s lawsuit for money owed under a contract, or to seek a refund of money they have paid under the contract,” according to the FTC.

Comments sought. The FTC is soliciting comment on a number of specific questions, including:

• whether there is a continuing need for the rule;

• if the rule should be modified;

• the rule’s impact, costs, and benefits to both consumers and businesses; and

• whether the rules overlaps or conflicts with other federal, state, or local laws or regulations.

News: ConsumerProtection FederalTradeCommissionNews