A business regularly extends credit to customers for large purchases with a standard interest rate of 5 percent. There is also a $200 installment fee that is added to the total cost of the purchase. The sales people are required to tell customers about this fee before adding it to the bill, but it is not in writing. Does this comply with the Truth in Lending Act?
• No, adding any kind fee is deceptive and illegal.
• Yes, consumers expect that there will be installment fees.
• No, all details of the terms of credit must be documented in writing.
• Yes, as long as the customer is informed of all fees, the business has done its duty.
No, all details of the terms of credit must be documented in writing.
The Truth in Lending Act requires that all terms and conditions of credit, including any fees, be disclosed in writing to consumers before they finalize the transaction. Failure to provide this information in writing could be considered deceptive and illegal under the law. Therefore, simply informing customers verbally about the installment fee is not sufficient to comply with the Truth in Lending Act.