## Facts

- Angela and Darrel Lea attended an open house for a wholesale membership club operated by Buy Direct, L.L.C. (DirectBuy of Houston North).
- The Leas agreed to purchase a three-year membership for $3,995, with a required 10% down payment.
- Because they could not pay the full down payment that day, they paid $100 immediately and agreed to pay $295 later to complete the down payment.
- The parties executed a Membership Agreement and a Retail Installment Contract, both post-dated June 5, 2012.
- The Retail Installment Contract left blank the start date and the day of the month on which installment payments would be due, stating these would be determined based on when the down payment was fully paid.
- Soon after signing, the Leas attempted to cancel and sent written rescission notice.
- The Leas sued for statutory damages under the Truth in Lending Act (TILA), alleging the documents failed to disclose required payment due dates.

## Issues

1. Whether the credit transaction was “consummated” for TILA purposes when the Leas signed the agreements, even though the full down payment had not yet been paid.
2. Whether Direct Buy violated TILA by failing to disclose the due dates or payment period for scheduled installment payments at or before consummation.
3. Whether the asserted disclosure defect, if proven, entitled the Leas to statutory damages without proof of actual loss.

## Decision

- The Fifth Circuit reversed the district court’s summary judgment for Direct Buy.
- The court held the transaction was consummated on May 16, 2012, when the Leas signed and became contractually obligated under applicable state contract law.
- The court held Direct Buy violated TILA by failing to disclose the start date and specific due dates (or payment period) for the installment payments in the written contract at consummation.
- The court remanded with instructions to enter judgment for the Leas, awarding statutory damages under TILA.

## Legal Principles

- “Consummation” under TILA occurs when the consumer becomes contractually obligated on the credit transaction, as determined by state law, not when a down payment is completed or administrative details are later finalized.
- TILA requires written disclosure of the “number, amount, and due dates or period of payments” scheduled to repay the obligation, at or before consummation.
- Leaving payment dates blank to be determined by a future event fails TILA’s disclosure requirements because the consumer lacks definite payment timing at consummation.
- Statutory damages may be imposed for technical violations of TILA’s mandatory disclosure rules without a showing of actual damages.

## Conclusion

The Fifth Circuit held that the Leas’ retail installment transaction was consummated when they signed the agreements and became contractually bound, triggering TILA’s disclosure duties; because Direct Buy omitted required payment due-date information at consummation, the Leas were entitled to statutory damages and judgment in their favor.


Lea v. Buy Direct, L.L.C., 755 F.3d 250 (5th Cir. 2014)