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FTC RIN: 3084-AB16 Publication ID: Fall 2016 
Title: Preservation of Consumers' Claims and Defenses (Holder-in-Due-Course Rule) 

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 January 2017.


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.

Agency: Federal Trade Commission(FTC)  Priority: Substantive, Nonsignificant 
RIN Status: Previously published in the Unified Agenda Agenda Stage of Rulemaking: Prerule Stage 
Major: No  Unfunded Mandates: No 
CFR Citation: 16 CFR 433   
Legal Authority: 15 U.S.C. 45 et seq   
Legal Deadline:  None
Action Date FR Cite
Rule Review, Request for Comments  12/01/2015  80 FR 75018   
Comment Period Closing Date  02/12/2016 
Recommendation to Commission  01/00/2017 
Regulatory Flexibility Analysis Required: Undetermined  Government Levels Affected: Undetermined 
Small Entities Affected: Businesses, Governmental Jurisdictions, Organizations  Federalism: No 
Included in the Regulatory Plan: No 
RIN Data Printed in the FR: No 
Related RINs: Related to 3084-AA08 
Agency Contact:
Stephanie Rosenthal
Federal Trade Commission
600 Pennsylvania Avenue NW,
Washington, DC 20580
Phone:202 326-3332