FTC Affirms Holder in Due Course Rule


On May 10, the FTC released an advisory opinion affirming that the Holder in Due Course Rule does not limit or preclude a consumer’s right to recovery other than to restrict awards to monies paid under a contract. The opinion was prepared in response to a request by consumer groups concerned by court decisions, beginning with Ford Motor Credit Co. v. Morgan, 536 N.E.2d 587 (Mass. 1989), that had limited recovery under the Rule to cases in which the consumer is entitled to rescission or similar relief under state law. Noting that such courts have misinterpreted the Rule’s Statement of Basis and Purpose, the advisory opinion states that the plain language of the Rule is clear and does not limit affirmative recovery to those circumstances where rescission is warranted or where the goods or services sold to the consumer are worthless.


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