Ability To Charge A Fee To Protect Against Repossession Losses - Q4 1999By the Division of Banks
The prohibition of a creditor of an automobile retail installment sale agreement from paying a fee to a repossession service company and charging said fee to the debtor at the time of the contract is governed by Massachusetts General Laws chapter 255B.
The Division utilizes a two-step analysis in determining whether a proposed fee may be charged as part of a consumer credit transaction. The initial question concerns whether such a fee is authorized by statue, and subsequently, if it is authorized, how must it be disclosed to the borrower.
It is clear from the language of chapter 255B that a default or repossession is not specifically authorized under this statute. Section 14 of chapter 255B sets forth which charges are authorized on a retail installment contract and a default of repossession charge is not one of them. However, section 14 contains a cross-reference to items expressly provided for in chapter 140D.
It has been the consistent position of the Division that said chapter 140D is a consumer credit card disclosure statute and not an enabling statute. Chapter 140D does not authorize a creditor to assess certain charges to a consumer but rather establishes how any authorized charges must be properly disclosed. Therefore, since a default or repossession charge is not specifically authorized by chapter 255B, it can not be assessed as part of a finance charge on a motor vehicle retail installment contract based on it being defined as a finance charge under chapter 140D.
People also viewed...
You recently viewed...
Personalization is OFF. Your personal browsing history at Mass.gov is not visible because your personalization is turned off. To view your history, turn your personalization on.
Learn more on our .
*Recommendations are based on site visitor traffic patterns and are not endorsements of that content.