High court keeps cap on loan damages

WASHINGTON – Car buyers beware, the Supreme Court said Tuesday that people who are misled about auto loans cannot use a federal law to receive significant damages.

When Congress passed the Truth in Lending Act 36 years ago, it decided to let consumers sue dishonest lenders for damages of $100 to $1,000.

The law has been revised several times since then, but the Supreme Court ruled 8-1 that the damage caps remain.

About 45 million cars are bought and sold in the United States each year. Many are financed through a bank or other lender.

Tuesday’s ruling also applies to other financed purchases, such as appliances and furniture, but not to homes.

The loser was Bradley Nigh, who alleged he was a victim of unscrupulous tactics by a Virginia car dealer when he tried to buy a used car four years ago.

A jury ordered the dealer, formerly known as Koons Buick Pontiac GMC Inc., to pay Nigh more than $24,000 in damages. The high court said, however, that he was entitled to no more than $1,000 under the federal law.

“The lesson for consumers is you’ve got to be careful,” said Richard Rubin of Santa Fe, N.M., attorney for groups such as the National Association of Consumer Advocates. “Car dealers and other creditors who are stealing money from people are going to continue to steal because it’s profitable.”

A ruling the other way could have led to claims for more than $1 billion in damages nationwide each year, auto dealers and banks said, with buyers having to pay higher interest rates as a result.

Talk to us

More in Local News

An example of the Malicious Women Co. products (left) vs. the Malicious Mermaid's products (right). (U.S. District Court in Florida)
Judge: Cheeky candle copycat must pay Snohomish company over $800K

The owner of the Malicious Women Co. doesn’t expect to receive any money from the Malicious Mermaid, a Florida-based copycat.

A grave marker for Blaze the horse. (Photo provided)
After Darrington woman’s horse died, she didn’t know what to do

Sidney Montooth boarded her horse Blaze. When he died, she was “a wreck” — and at a loss as to what to do with his remains.

A fatal accident the afternoon of Dec. 18 near Clinton ended with one of the cars involved bursting into flames. The driver of the fully engulfed car was outside of the vehicle by the time first responders arrived at the scene. (Whidbey News-Times/Submitted photo)
Driver sentenced in 2021 crash that killed Everett couple

Danielle Cruz, formerly of Lynnwood, gets 17½ years in prison. She was impaired by drugs when she caused the crash that killed Sharon Gamble and Kenneth Weikle.

A person walks out of the Everett Clinic on Thursday, Sept. 7, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
The Everett Clinic changing name to parent company Optum in 2024

The parent company says the name change will not affect quality of care for patients in Snohomish County.

Tirhas Tesfatsion (GoFundMe) 20210727
Lynnwood settles for $1.7 million after 2021 suicide at city jail

Jail staff reportedly committed 16 safety check violations before they found Tirhas Tesfatsion, 47, unresponsive in her cell.

A person walks in the rain at the Port of Everett in Everett, Washington on Saturday, Sept. 23, 2023. (Annie Barker / The Herald)
First heavy rain event predicted Sunday night for Snohomish County

Starting Sunday evening, 1 to 1½ inches of rain is expected in western Washington. It marks the end of fire season, meteorologists said.

Clinton man, 61, dies in motorcycle crash Friday

Washington State Patrol lists speed as the cause. No other people or vehicles were involved.

Logo for news use featuring the municipality of Lake Stevens in Snohomish County, Washington. 220118
Separate road rage incident ends with fatal shooting in Lake Stevens

A man, 41, died at the scene in the 15300 block of 84th Street NE. No arrests have been made.

The Drug Enforcement Administration and law enforcement partners advise the public of of colorful fentanyl.  (Photo provided by the Drug Enforcement Administration)
After rainbow fentanyl pills found in Tulalip, police sound alarms

Investigators are concerned the pastel-colored pills may end up in the hands of children.

Most Read