from the Marion Superior Court The Honorable Gary L. Miller,
Judge, Trial Court Cause No. 49D03-1801-PL-2762
Attorneys for Appellant Ronald C. Smith Joel T. Nagle Stoll
Keenon Ogden PLLC Indianapolis, Indiana
Attorneys for Appellee Thomas W. Dinwiddie Allison Wells
Gritton Wooden McLaughlin LLP Indianapolis, Indiana Attorneys
for Amicus Curiae the Indiana Bankers Association Libby Yin
Goodknight Brett J. Ashton Krieg DeVault LLP Indianapolis,
VAIDIK, CHIEF JUDGE.
This case concerns two provisions of the Indiana Uniform
Consumer Credit Code (IUCCC): one that requires sellers to
disclose finance charges to credit customers, Indiana Code
section 24-4.5-2-301, and one that allows sellers to impose
certain charges on credit customers "in addition
to" finance charges, Indiana Code section 24-4.5-2-202.
For a period of time, Webb Ford, a car dealership in
Highland, imposed a finance charge on credit customers but
did not disclose it as such. The Indiana Department of
Financial Institutions (DFI) initiated an enforcement action
against Webb Ford, but it did not treat the charge as an
undisclosed finance charge, i.e., a violation of the
disclosure statute. Instead, DFI treated it as an
"impermissible additional charge," i.e., a
violation of the additional-charges statute. Webb Ford argues
that a finance charge does not cease being a finance charge
merely because it is not disclosed as such. We agree with
Webb Ford. Accordingly, we remand this matter to DFI for
further proceedings under the disclosure statute.
and Procedural History
DFI regulates and supervises financial-services providers,
including those who provide motor-vehicle financing. DFI
administers the IUCCC, Indiana Code article 24-4.5.
See Ind. Code § 24-4.5-1-201 (setting forth the
purposes and policies of the IUCCC). Among other provisions,
the IUCCC incorporates federal law regarding what sellers
must disclose to buyers in consumer credit sales:
The seller shall disclose to the buyer to whom credit is
extended with respect to a consumer credit sale . . . the
information required by the Consumer Credit Protection Act
(15 U.S.C. 1601 et seq.).
Ind. Code § 24-4.5-2-301(2) ("the disclosure
The Truth in Lending Act (TILA) is contained in Title I of
the Consumer Credit Protection Act. Congress passed TILA
"to promote consumers' 'informed use of
credit' by requiring 'meaningful disclosure of credit
terms,' 15 U.S.C. § 1601(a), and granted the Board
[of Governors of the Federal Reserve System] the authority to
issue regulations to achieve TILA's purposes, §
1604(a)." Chase Bank USA, N.A. v. McCoy, 562
U.S. 195, 198 (2011). Pursuant to this authority, the Board
promulgated Regulation Z. Id. Regulation Z requires
creditors to make disclosures "clearly and conspicuously
in writing, in a form that the consumer can keep." 12
C.F.R. § 1026.17. Required written disclosures include:
(1) the "amount financed"; (2) an "itemization
of amount financed"; (3) the "finance charge";
and (4) the "annual percentage rate." 12 C.F.R.
§ 1026.18(b)-(e); see also 15 U.S.C. §
1638(a). "Finance charge" is defined as follows:
The finance charge is the cost of consumer credit as a dollar
amount. It includes any charge payable directly or indirectly
by the consumer and imposed directly or indirectly by the
creditor as an incident to or a condition of the extension of
credit. It does not include any charge of a type payable in a
comparable cash transaction.
12 C.F.R. § 1026.4(a); see also 15 U.S.C.
§ 1605(a). It is a violation of the IUCCC to
"fail to make disclosures as required by" TILA and
Regulation Z. Ind. Code § 24-4.5-6-107.5(g).
In 2007, the Indiana Bureau of Motor Vehicles (BMV) began a
pilot program that allowed car dealerships to offer
registration and titling services at the time of the sale,
thereby saving customers a trip to the BMV. Appellant's
App. Vol. III p. 128. The BMV allowed dealerships to charge
customers a convenience fee for this service.
Thereafter, Webb Ford began charging a $25.00 convenience fee
to its credit customers for electronic titling with the BMV
through a third party, Computerized Vehicle Registration
(CVR). Webb Ford charged the $25.00 convenience fee in
addition to a $15.00 fee that went to the BMV.
Appellant's App. Vol. III p. 127. Webb Ford required its
credit customers to use electronic filing because the lenders
to whom Webb Ford assigned the retail installment contracts
required the dealership to show the assignee's name on
the title before they would accept the contract. Id.
at 119, 127. Webb Ford, however, did not require its cash
customers to use this service but rather gave them the
option. Approximately 40% of Webb Ford's cash customers
opted to use electronic filing and pay the $25.00 convenience
fee. The remaining 60% went to the BMV themselves, thereby
avoiding the fee altogether.
For several days in December 2015 and January 2016, DFI
conducted a routine examination of Webb Ford's records
for compliance with the IUCCC, including TILA and Regulation
Z. In February 2016, DFI issued a Consumer Credit Examination
Report. Appellant's App. Vol. II pp. 29-36. In this
examination report, DFI identified "[o]ne
violation" from a transaction on July 27, 2015, where
Webb Ford did not properly disclose the $25.00 convenience
fee on the retail installment contract. Id. at 32.
According to DFI, Webb Ford should have disclosed the $25.00
convenience fee in the "Finance Charge" box, as the
fee was only mandatory for credit customers and therefore was
"a condition of the extension of credit."
Id. Although Webb Ford did not provide the retail
installment contract from that July 27, 2015 transaction, it
did provide another one from the same time period. According
to this retail installment contract, Webb Ford disclosed the
$25.00 convenience fee (referred to as a "Filing
Fee" on the contract) in the "Itemization of Amount
Financed" and "Amount Financed" boxes, not in
the "Finance Charge" box: (Image Omitted)
Appellant's Supp. App. Vol. II p. 2. As a result of
finding this violation, DFI ordered Webb Ford to conduct a
"file search" to "identify and refund all
instances where [the $25.00 convenience fee was] assessed on
consumer credit sales since December 30,
2013." Appellant's App. Vol. II p. 32.
Thereafter, Webb Ford and DFI tried to resolve the matter
informally. Webb Ford told DFI that by April 2016, it had
discontinued its practice of "including the convenience
fee in the Amount Financed" box and had started charging
"both credit and cash customers alike the convenience
fee charge, ...