## Facts

- Jerry and Mary Taylor bought a car from Quality Hyundai and purchased an extended warranty financed through a retail installment contract.
- The disclosure statement listed the full warranty charge under “Amounts Paid to Others for You,” indicating it was paid to a third-party warranty provider.
- The Taylors alleged the disclosure was inaccurate because the dealer retained part of the warranty fee rather than remitting the entire amount to the provider.
- Quality Hyundai assigned the installment contract to Bank One, making Bank One the assignee creditor.
- A separate, substantially similar transaction involving Davita M. Smith and DeSi Auto Sales was consolidated for opinion purposes; that contract was assigned to Guardian National Acceptance Corp.
- The district courts dismissed the TILA claims, including on the ground that the assignees could not be liable.

## Issues

1. Whether a dealer violates TILA by disclosing the full extended-warranty charge as an amount paid to others when the dealer retains a portion.
2. Whether assignees are civilly liable under TILA for such disclosure errors when the violation is not apparent from the face of the assigned documents.
3. Whether the FTC “holder” notice in the consumer credit contract expands assignee exposure beyond TILA’s assignee-liability limits.

## Decision

- The court affirmed judgment for Bank One (assignee), holding the alleged violation was not apparent on the face of the disclosure statement or assigned documents.
- The court reversed dismissal of the Taylors’ TILA claim against Quality Hyundai (dealer) and remanded for further proceedings on dealer liability.
- In the consolidated appeal, the court affirmed judgment for Guardian (assignee) on the same assignee-liability grounds.
- The court rejected reliance on the FTC holder notice to impose assignee liability beyond TILA’s statutory limits.

## Legal Principles

- Under 15 U.S.C. § 1641(a), a TILA civil action may be maintained against an assignee only if the violation is apparent on the face of the disclosure statement or other assigned documents (including omissions or required-terminology failures identifiable from the documents themselves).
- A disclosure that labels a charge as an amount paid to a third party may be actionable against the dealer under TILA if the dealer retains part of that charge and does not disclose the retention.
- An assignee’s general familiarity with industry practices does not satisfy § 1641(a)’s “apparent on the face” standard; liability does not arise from facts requiring extrinsic investigation.
- The FTC holder notice cannot override or expand TILA’s statutory limits on assignee liability where § 1641(a) forecloses recovery against an assignee.

## Conclusion

The Seventh Circuit reinstated the TILA claim against the dealer for allegedly misleading disclosure of an extended-warranty fee while holding that assignees are not liable unless a TILA violation is facially evident from the assigned documents, and that the FTC holder notice does not expand assignee liability beyond § 1641(a).


Taylor v. Quality Hyundai, Inc., 150 F.3d 689 (7th Cir. 1998)