A FAILURE OF CREDIT REGULATION: THE CASE OF NCAS OF DELAWARE.

The Truth in Lending Act of 1968 (TILA) was a landmark piece of legislation that was designed to inform consumers about the true cost of credit. Prior to the TILA, lenders used many different methods to calculate the stated interest rate on a loan. The TILA required all lenders to state an annual percentage rate (APR) that was calculated on a consistent basis. This allowed consumers to compare rates, and to assess the cost of borrowing. Over the years, however, banks and other lenders sought and obtained numerous exceptions that allowed them to charge fees that were not included or disclosed in the APR. This practice has become so egregious that in a recent case, Pennsylvania Department of Banking v. NCAS of Delaware, a lender was able to legally claim an APR of 5.98%, while the actual cost of the loan was 368%. This paper reviews the history of the TILA and uses the NCAS of Delaware case to show how the TILA's purpose has been undermined. The paper concludes with a recommendation for reform that would restore the TILA to its former role as an effective consumer protection statute. [ABSTRACT FROM AUTHOR]