District Court (Ala.) Limits Auto Finance Company’s Liability under the FTC Holder Rule to Amounts Paid

In Wait v. Roundtree Mobile, LLC, 2015 WL 6964668, at *8-9 (S.D.Ala., 2015), Judge Granade  granted summary judgment to an auto finance company under the FTC Holder Rule.

In the motion for summary judgment, BMW claims that “[b]oth the FTC Holder Rule as well as the explicit terms of the Contract provide that recovery by the Debtor shall not exceed amounts paid by the Debtor.” (Doc. 23, p. 11). Thus, “if the Plaintiffs’ claims survive, … the Plaintiffs’ right to recover must be limited to the amounts paid by the Plaintiffs under the contract, or in this case, $900.00.” Id. An employee for BMW asserted in an affidavit that Plaintiffs made only $900.00 in payments. (Doc. 23-1, p. 2). Plaintiffs seemingly concede, stating, “As a fallback position, BMW asks the Court to limit its liability to the $900 which they claim was actually paid to them by the Plaintiffs. This is only appropriate inasmuch as the Plaintiffs seek affirmative recovery from BMW for breach of contract.” (Doc. 25-1, p. 4).  *9 The FTC Holder Rule states the following:  In connection with any sale or lease of goods or services to consumers, in or affecting commerce …, it is an unfair or deceptive act or practice … for a seller, directly or indirectly, to:  (a) Take or receive a consumer credit contract which fails to contain the following provision in at least ten point, bold face, type:  NOTICE ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. 16 C.F.R. § 433.2(a) (2015). The sales contract repeats this paragraph word-for-word, in all caps and bold font. (Doc. 23-2, p. 2). While it is difficult to determine by the filings whether the paragraph uses the required font size, Plaintiffs have not argued to the contrary. BMW also cites to an FTC Holder Rule case from our sister court in the Middle District of Alabama holding that buyers could not recover more than they had paid to the financing company. See Eachen v. Scott Hous. Sys., Inc., 630 F. Supp. 162, 166 (M.D. Ala. 1986). BMW’s arguments are well taken.  The Court finds that summary judgment should be granted to BMW on this claim. To the extent that Plaintiffs are entitled to damages pursuant to a claim under the FTC Holder Rule, the recovery is limited to the amount paid by Plaintiffs on the contract. This ruling does not prevent Plaintiffs from pursuing alternative remedies, should they be warranted.