On December 1, 2015, the Commission requested comments on the Holder-in-Due Course Rule (Rule) as part of the Commission's systematic review of all current Commission rules and guides. 80 FR 75018. The comment period closed on February 12, 2016, and Commission staff are reviewing the comments. Staff anticipates sending a recommendation to the Commission by December 2018.

Issued in 1975, the Holder-in-Due-Course Rule requires sellers to insert language into consumer credit contracts that preserves any claims and defenses that consumers might have against the seller. The Commission promulgated the rule after concluding that the use of certain credit transactions to foreclose consumer claims and defenses arising from credit sale transactions was an unfair practice. This rule eliminated the holder-in-due-course doctrine as a legal defense for separating the consumer's obligation to pay from the seller's duty to perform. The rule specifically requires sellers entering into "consumer credit contracts" or accepting the proceeds of "purchase money loans" to ensure that sales finance contracts and loan contracts contain one of two clauses that preserve the buyer's right to assert against any "holder" of the credit contract the sales-related claims and defenses that the buyer may have against the seller.