Liability for Violations of TISA
This section will describe the sort of liability you may face in the event you violate the Truth-in-Savings Act (TISA), Regulation DD, or Part 707.
Violating TISA can result in two forms of liability: administrative liability and civil liability, though civil liability exists only for violations that occurred before September 30, 2001. Section 271 of the Truth-in-Savings Act [12 USC 4310] is the section that provides for civil liability. That Section was repealed, effective September 30, 2001, by the Economic Growth and Regulatory Paperwork Reduction Act of 1996, Section 2604. [12 CFR 1030.9(b)] Civil liability is still worth looking at, however, since violations preceding September 30, 2001, may still be litigated.
Administrative liability means liability to your administrative agency (the FDIC, FRB, or NCUA). TISA authorizes these agencies to enforce the Truth-in-Savings Act by using any authority conferred on them by law for other purposes (e.g., cease and desist orders). [12 USC 4309]
- Actual damages—the actual harm, in monetary terms, suffered by the person; plus
- Additional damages. In lawsuits other than class actions, additional damages will be not less than $100 and not more than $1,000; in class actions, additional damages are whatever the court allows, but no minimum recovery for each member of the class is allowed and there are limits on the total recovery.
[12 USC 4310(a)(1) and (2)]
Costs and attorney’s fees will also be payable if the account holder’s suit is successful. [12 USC 4310(a)(3)]
An institution will not be liable if it can show the violation was not intentional and was the result of a “bona fide error” (e.g., computer malfunction). [12 USC 4310(c)] An institution will also not be liable if it paid more interest than what would be payable under the disclosed interest rate or charged less than the fees disclosed. [12 USC 4310(d)]
Civil liability for violations of the advertising rules is interesting. First, remember that civil liability is available only to consumers who open an account with the institution. So, someone strolling down the sidewalk in front of your institution who spots an advertising violation in your outdoor sign can’t successfully sue without opening an account with you. Second, however, the consumer is not required to show that he/she relied on the advertisement or was mislead by it, or even that he/she suffered any financial harm because of the violation. (Shnall v. Amboy National Bank, 2002 U.S. App. LEXIS 1209 (7th Cir 2002),
You can avoid any liability (civil or administrative) if you notify the account holder of the violation and make corrections within 60 days of discovering the violation. However, you must do this before the account holder starts an action or notifies you of the violation. [12 USC 4310(g)]