In a recent case, the United States District Court for the District of Connecticut granted a motion to dismiss, finding that the Defendant had no obligation to provide disclosures under the Truth in Lending Act (TILA) during a loan pre-approval process.
What was the case about?
Pro se plaintiff completed an online pre-approval form, seeking an open-ended consumer credit loan from the Defendant. Plaintiff’s credit application was ultimately denied due to insufficient income. In response, the Plaintiff filed a lawsuit against the Defendant and asserted claims for violations of the Equal Credit Opportunity Act and TILA. Regarding his TILA claim, the Plaintiff alleged that the Defendant violated TILA by not providing TILA disclosures before “pre-approving” the Plaintiff for the loan.
How did the Court rule?
Defendant moved to dismiss, arguing that it was not required to provide TILA disclosures during the pre-approval process. The Court agreed, finding that the Defendant had no obligation to provide TILA disclosures when Plaintiff was never actually extended a loan. The plain language of the statute provides that creditors must provide certain disclosures at some point “[b]efore” a debtor opens an account, but does not impose a specific time frame. Case law establishes, and the Court here affirmed, that disclosures are not required in the pre-approval or application process, but rather, at the time the consumer opens the account.
