Guide to Penalties for Violation of Federal Consumer Credit Laws and Regulations Disclaimer

The following is a quick reference to potential penalties for certain federal consumer laws and regulations referenced in this Compliance Guide.

#StayCompliant

This is not intended as an exhaustive or official analysis of all penalties that may be assessed for a violation. You should consult your attorney with any questions you may have for your particular situation. Please also note that some of the penalties identified below are subject to periodic adjustment, and the amounts reflected below are indicative of a particular period in time only ( December 2020), and may be subject to change.

Consumer Credit Protection Act

Truth in Lending (TILA), Consumer Leasing Act (CLA), Fed Regs M and Z

Truth in Lending (TILA), Consumer Leasing Act (CLA), Fed Regs M and Z Regulator may adjust the account of the person to whom credit was extended so that such person is not required to pay a finance charge in excess of the charge disclosed, or the dollar equivalent of the annual percentage rate disclosed, whichever is lower. 15 U.S.C. § 1607(e).
Private right of action (for certain violations):
- Court costs.
- Actual damages.
- Statutory damages:
  - Individual action – twice the finance charge (or, in the case of a lease, 25% of total monthly payments with a minimum of $200 and a maximum of $2,000.
  - Class action – damages of up to the lower of $1,000,000 or 1% of creditor’s net worth. No minimum recovery for each member of the class applies. 15 U.S.C. § 1640.
Willful and knowing violations: fine of $5,000, one-year imprisonment, or both. 15 U.S.C. § 1611(1).
Assignees liable to the extent a violation is apparent on the face of the disclosure statement. 15 U.S.C. § 1641.

Driver's Privacy Protection Act (DPPA)

Private right of action for: actual damages (but not less than liquidated damages in the amount of $2,500); punitive damages upon proof of reckless or willful disregard for the law; reasonable attorney’s fees and other litigation costs reasonably incurred; and preliminary and equitable relief as the court deems appropriate. 18 U.S.C. § 2724(b).
Criminal penalties under federal law. 18 U.S.C. § 2723.

Equal Credit Opportunity Act (ECOA)

Fed Reg B

The FTC can enforce violation of ECOA as a violation of the FTC Act, with potential for damages of up to $43,280 per violation if the FTC enters into an enforcement decree. 15 U.S.C. § 1691c(c); 16 C.F.R. § 1.98.
If unable to obtain compliance, the FTC may refer a violation to the U.S. Department of Justice (DOJ). The DOJ may pursue a civil action where creditors are engaged in a pattern or practice of violations, and obtain such relief as may be appropriate, including to bring a civil action for actual and punitive damages and injunctive relief.
Individuals may seek recovery individually or as a class for actual damages for certain violations of ECOA. In addition, punitive damages are available, but limited to $10,000, but in a class action total recovery must not exceed the lesser of $500,000 or 1% of dealer’s net worth. Equitable and declaratory relief are also available. In addition, costs and reasonable attorney’s fees can be recovered by individuals or a class. 15 U.S.C. § 1691e; 12 C.F.R. § 202.16.

Fair Credit Reporting Act (FCRA)

Including but not limited to Red Flags Rule, Disposal Rule, and Risk-Based Pricing Rule

$4,063 per violation for knowing violations, which constitutes a pattern or practice of violations alleged by the FTC. 5 U.S.C. § 1681s(a)(2)(A); 16 C.F.R. § 1.98. Any violation also violates FTC Act § 5 (Unfair, Deceptive Acts or Practices), with potential for damages of $41,484 per violation if FTC enters into an enforcement decree. 16 C.F.R. § 1.98.
Private right of action for certain provisions (e.g., permissible purpose, adverse action).
- For negligent violations: actual damages and the costs of the action together with reasonable attorney’s fees. 15 U.S.C. § 1681o.
- For willful violations: actual damages or statutory damages of not less than $100 and not more than $1,000 per violation, and punitive damage liability with no cap and costs of the action together with reasonable attorney’s fees. 15 U.S.C. § 1681n.

Adverse Action Notices

See ECOA and FCRA.

OFAC

Civil penalties (per violation) – 31 C.F.R. § 501, App. A:
- Trading With the Enemy Act: up to $89,170.
- International Economic Powers Act: up to the greater of $302,584 or twice the amount of the underlying transaction.
- Antiterrorism and Effective Death Penalty Act: up to the greater of $79,874 or twice the amount of which a financial institution was required to retain possession or control.
- Foreign Narcotics Kingpin Designation Act: up to $1,503,470.
- Clean Diamond Trade Act: up to $13,669.
Criminal penalties:
- Trading with the Enemy Act: Fines up to $250,000 for individuals and $1,000,000 for organizations or twice the pecuniary gain or loss from the violation 10 years imprisonment. 31 C.F.R. § 501.701(b).
- International Economic Powers Act: imprisonment for not more than 20 years and a fine of not more than $1,000,000. 50 U.S.C. § 1705.
- Antiterrorism and Effective Death Penalty Act: $500,000 per count against corporations, and 10 years imprisonment and $250,000 per count for individuals. 18 U.S.C. § 2332d; 18 U.S.C. § 3571; 31 C.F.R. § 596.701.
- Foreign Narcotics Kingpin Designation Act: 10 years imprisonment and fine of not more than $10,000,000. 31 C.F.R. § 598.701.
- Clean Diamond Trade Act: for individuals, $250,000 per count and 10 years imprisonment; for corporations, $500,000. 19 U.S.C. § 3907; 18 U.S.C. § 3571.

UDAP Laws (FTC Act § 5) and UDAAP (Consumer Financial Protection Act)

FTC Act: up to $43,280 per violation. 15 U.S.C. § 45(m)(1); 16 C.F.R. § 1.98.
The CFPB can assess penalties of up to $1,156,242per day against independent and buy-here-pay-here dealers for violations. 12 U.S.C. § 5531; 12 U.S.C. § 5565(c)(2)(C); 12 C.F.R. § 1083.1.
Private causes of action for actual, statutory, and punitive damages are permitted under most state UDAP laws. Some states allow recovery of treble damages.

UDAAP (Dodd-Frank Act, CFPB Small Dollar Rule)

rescission or reformation of contracts;
refund of moneys or return of real property;
restitution;
disgorgement or compensation for unjust enrichment;
payment of damages or other monetary relief;
public notification regarding the violation, including the costs of notification;
limits on the activities or functions of the person; and
civil money penalties of
- $5,781 per day that the violation continues;
- If reckless violation, $28,906 per day that the violation continues;
- If knowing violation, $1,156,242 per day that the violation continues.

12 U.S.C. § 5565(a), (c); 12 C.F.R. § 1083.1.

IRS Form 8300: Reporting of cash payments in excess of $10,000

For forms required to be filed on and after January 1, 2019:
- Generally, for failure to timely file a complete and accurate Form 8300 or to furnish notice to persons on whom Form 8300s were filed, the penalty is $270 per report with an aggregate annual limit of $1,091,500 for businesses with gross receipts not exceeding $5 million and $3,275,500 for businesses with gross receipts exceeding $5 million. Revenue Procedure 2018-18.
- For failure to file due to intentional disregard, the penalty is the greater of $27,290 or the amount of cash received, not to exceed $109,000. Revenue Procedure 2018-18.
- For failure to furnish notice to persons on whom Form 8300s were filed due to intentional disregard, the penalty is $540 per failure or, if greater, 10% of the aggregate amounts of the items required to be reported. Revenue Procedure 2018-18.
- Note that the IRS adjusts the penalty amounts for inflation annually.

Used Car Rule

Up to $43,280 per violation. 16 C.F.R. § 455.1; 16 C.F.R. § 1.98.
Possible state AG claims under UDAP and motor vehicle sales laws.
Possible UDAP claims or fraud claims under state laws.

Federal Odometer Act

The Department of Transportation can impose penalties of up to $10,932 per violation, subject to a $1,093,233 cap for a related series of violations. 49 C.F.R. § 578.6(f)(1).
In a private party civil action where the violation involves the intent to defraud, liability is the greater of three times the actual damages or $10,932 . 49 C.F.R. § 578.6(f)(2).

FTC Telemarketing Rule

Up to $43,280 for each violation; redress to injured consumers; disgorgement of ill-gotten gains earned from the unlawful conduct. 16 C.F.R. § 310.3; 16 C.F.R. § 310.4; 16 C.F.R. § 1.98.
For dealers, subject to CFPB regulation, regulation per day penalties of up to $5,781 , for violations that are not reckless or knowing. The cap for reckless violations is $28,906 per day; the cap for knowing violations is $1,156,242 per day. 12 U.S.C. § 5565(a), (c); 12 C.F.R. § 1083.1.
States may also obtain relief.

Military Lending Act 10 U.S.C. § 987, 32 C.F.R. Part 232

Actual damages of not less than $500 per violation. 10 U.S.C. § 987(f)(5)(A)(i).
Violating contracts are void from inception. 10 U.S.C. § 987(f)(3).
Arbitration agreements are unenforceable. 10 U.S.C. § 987(f)(4).
Punitive damages, equitable or declaratory relief, reasonable attorney’s fees, court costs, and any other relief provided by law. 10 U.S.C. § 987(f)(5)(A)(ii)-(iv).
Knowing violations are misdemeanors, punishable by fines, up to one-year imprisonment, or both. 10 U.S.C. § 987(f)(1).

Magnuson-Moss Warranty Act

May constitute an FTC § 5 UDAP violation, up to $43,280 per violation. 15 U.S.C. § 45(m)(1).
Consumers can recover damages from the breach. This includes remedies already available under state law. 15 U.S.C. § 2310(d).

Telephone Consumer Protection Act (TCPA) and FCC

Private right of action allows consumer to sue for statutory damages of $500 (and up to $1,500 for a willful or knowing violation) per call or text message sent to any wireless number you cannot prove you have valid prior consent to call or text. For do-not-call violations, the statutory damages calculation is up to $500 / $1,500 per violation.
Class action liability is unlimited.
Potential civil forfeiture penalties for violations of the Truth in Caller ID Act of $11,562 per violation, $34,686 per day for each day of continuing violation up to $1,127,799 for any single act or failure to act. 47 U.S.C. § 227(e); 47 C.F.R. § 1.80.
Other civil forfeiture penalties for violations of provisions other than the Truth in Caller ID Act include penalties of up to $20,134 per violation or per day of continuing violation, subject to a cap of $151,005 . 47 U.S.C. § 503(b)(2)(D); 47 C.F.R. § 1.80.
Criminal penalties for certain violations: a fine for willful and knowing violations of not more than $11,562 for each violation or $34,686 for each day of a continuing violation, or imprisonment of not more than 1 year or both; for repeat violations following an initial conviction, an individual could be fined not more than $10,000 or imprisoned not more than 2 years, or both. 47 U.S.C. § 227(e); 47 U.S.C. § 501.