TILA 'Finance' and 'Other' Charges in Open-End Credit: The Cost-of-Credit Principle Applied to Charges for Optional Products or Services
Abstract
The thesis of this article is that a more workable approach to characterizing fees for optional products and services is possible by focusing on charges that represent payment for discrete products or services of value to the consumer, freely chosen by consumers as contract options which do not affect the amount of credit available to the consumer, the consumer's access to it, or the allocation of payment responsibility and credit risk in the transaction or plan. In other words, these fees are for separate-or separable-purchases, analogous to subsequent events in closed-end credit that require no new disclosure or adjustment in the disclosed finance charge. The primary focus of this article is on open-end credit because it involves greater interpretive and operational challenges.