An Indiana federal court recently granted in part and denied in part the motion of ITT Educational Services, Inc. to dismiss the CFPB’s complaint. As we previously reported, the CFPB’s complaint alleged that ITT engaged in misrepresentations and other unlawful conduct to lead ITT students to obtain financing with onerous terms to pay tuition. The CFPB asserted various claims for alleged “unfair” and “abusive” conduct under the Consumer Financial Protection Act (CFPA), and a claim for an alleged TILA violation.
ITT moved to dismiss on three broad grounds: that the CFPA is unconstitutional, that ITT is not subject to the CFPA, and that the CFPB’s complaint failed to state a claim. While rejecting ITT’s various constitutional and other arguments for dismissal of the CFPA claims, the court dismissed the CFPB’s TILA claim. In a matter of first impression in federal court, the court held that a CFPB civil action under TILA is governed by TILA’s one-year statute of limitations. This is an important restriction on the CFPB’s ability to obtain relief for violations of TILA and the other federal consumer laws enforceable by the CFPB.
For a more detailed discussion of the decision, see our legal alert.