Gordon Rees Scully Mansukhani Partners Peter Siachos and Eric Evans obtained a victory in the United States District Court, Northern District of New York, securing full dismissal of a complaint against the firm’s client, a federal credit union.
The plaintiff, a disgruntled purchaser of a vehicle, filed a lawsuit against the credit union for alleged violations of the Truth in Lending Act ("TILA"), FTC regulations, and for consumer fraud pursuant to New York General Business Law § 349. The plaintiff claimed the dealership mislead them into purchasing a vehicle that exceeded the plaintiff’s budget despite the dealership’s knowledge that plaintiff’s only source of income was through workers’ compensation. The plaintiff further claimed the dealership grossly inflated the plaintiff’s income in the finance application to the credit union. The plaintiff argued that credit unions owe a statutory duty to perspective buyers of vehicles to investigate and verify the information in the finance application submitted by a dealership.
In its motion, the credit union argued “creditor liability” under TILA does not apply to credit unions but only applies to dealerships. Moreover, the credit union argued that a financial institutions’ duty of inquiry to ensure the accuracy of information in a finance application is exclusively limited to defects ascertainable from the facts of the documents themselves.
Lastly, the credit union argued the plaintiff failed to plead a consumer fraud claim because mere acceptance of a finance application from a dealership is not an affirmative conduct that would tend to deceive consumers. Accepting the credit union’s arguments, the court dismissed the plaintiff’s complaint against the credit union with prejudice.