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is not subject to any finance charge. However, most lenders require in their dealer agreements a representation and warranty from the dealer that it has received the down payment in full prior to assigning the RISC to the lender. Thus, while TILA permits deferred down payments, a lender on the receiving end of this representation and warranty could require a dealer to repurchase a RISC for breaching it. TILA provides several ways to disclose pick-up payments. A creditor may disclose pick-up payments either as part of the down payment or as a component of the amount financed. Other disclosure requirements may apply. State laws also have provisions relating to deferred down payments. Some states require a separate disclosure of the deferred portion of the down payment on the RISC. Non-disclosure of the deferred portion on the face of the RISC may violate some states’laws. TILA disclosures must reflect the legal obligation of the parties. If information necessary for the accurate disclosure is unknown, the disclosure may base the information on the best information reasonably known to the creditor and label the disclosures as estimates. In the case of a refinancing, new TILA disclosures must be provided for the refinanced transaction. TILA also includes recordkeeping requirements. Creditors must retain evidence of compliance for two years after the disclosures are required to be made. FTC Credit Practices Rule The FTC Credit Practices Rule has three major provisions. First, it prohibits certain unfair contract provisions, such as making consumers assign their wages to get credit or a creditor taking a lien on household goods to secure payment. Second, the rule prohibits“pyramiding”of late fees, when a payment is considered late only because the payment did not include a late fee from the previous payment. Third, the Credit Practices Rule also requires giving cosigners an FTC-mandated notice describing their potential liability if the consumer fails to pay. The notice must be given and signed by the cosigner before the cosigner becomes obligated on the agreement. A “cosigner” is different from a co-buyer, co-borrower, or co-applicant because a cosigner receives no tangible benefit from the agreement but undertakes liability as a favor to the main debtor who would not otherwise qualify for credit. On the other hand, a co-buyer (one who shares in the purchased goods), a co-borrower (one who shares in the loan proceeds), or a co-applicant do receive benefits. Therefore, they generally are not considered cosigners under the Rule, and you are not required to provide the cosigner notice to them. A classic example of a cosigner is a parent cosigning for their child’s credit obligation. Many states have additional requirements for cosigner notices so check with your local attorney on the cosigner notice required in your state. Recall that when two applicants for credit apply for financing, they are required to indicate on the credit application whether or not they intend to apply for joint credit. Electronic Signatures and Records The federal Electronic Signatures in Global and National Commerce Act (the E-SIGN Act) and the state-adopted Uniform Electronic Transactions Act (UETA) were enacted to resolve uncertainty about whether electronic

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201 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE