## Facts

- Malinee B. Virachack and Ritnarone T. Virachack bought a new Ford Explorer from University Ford (doing business as Bob Baker Ford) in November 2001 using credit.
- The retail installment contract disclosed an APR of 0.90% and a finance charge of $417.47, along with other TILA terms.
- Ford Motor Company offered a $2,000 manufacturer rebate for certain customers, but the rebate was not available to customers who used the promotional 0.9% APR financing arranged through the dealer.
- The rebate’s availability depended in part on the customer’s geographic location and was not mentioned in the Truth-in-Lending disclosure.
- The buyers could have received the $2,000 rebate by declining the 0.9% APR and financing at a non-promotional rate through the dealer or through independent financing.
- The buyers filed a putative class action under the Truth in Lending Act (TILA), alleging the withheld $2,000 rebate was a hidden finance charge.
- The district court granted summary judgment for the dealer, holding the rebate was not a finance charge; the buyers appealed.

## Issues

1. Whether a manufacturer rebate that is available to cash and some credit purchasers but unavailable to purchasers using a promotional below-market APR must be treated and disclosed as a “finance charge” under TILA and Regulation Z.

## Decision

- The Ninth Circuit affirmed summary judgment for the dealer.
- The court held the withheld $2,000 manufacturer rebate was not a “finance charge” under TILA and Regulation Z.
- The court concluded the dealer did not fail to disclose the total finance charge for the 0.9% APR transaction.

## Legal Principles

- TILA requires meaningful disclosure of credit terms to allow consumers to compare credit options and avoid uninformed use of credit.
- A “finance charge” includes charges payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. (15 U.S.C. § 1605(a); Regulation Z, 12 C.F.R. § 226.4(a))
- A mutually exclusive choice between promotional pricing alternatives (e.g., low APR financing versus a cash rebate) may be treated as a pricing incentive structure rather than a charge imposed as a condition of credit.
- A withheld promotional benefit, where the consumer can choose an alternative deal (rebate with different financing), does not necessarily constitute a finance charge merely because it is unavailable with a particular promotional credit term.

## Conclusion

The Ninth Circuit held that a $2,000 manufacturer rebate unavailable with a promotional 0.9% APR was a pricing promotion rather than a TILA finance charge, so the dealer’s failure to disclose the forgone rebate in the Truth-in-Lending statement did not violate TILA.


Virachack v. Univ. Ford, 410 F.3d 579 (9th Cir. 2005)