In Lafferty v. Wells Fargo Bank, — Cal.Rptr.3d —-, 2013 WL 412900 (2013), the Court of Appeal found that the FTC Holder Rule was not defensive in nature only, and that a consumer can assert affirmative ‘claims and defenses’ against the Holder, as the FTC’s May 3, 2012 Advisory Opinion also held.

The Holder Rule unambiguously allows the buyer to assert against the holder of a consumer credit contract “all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds” of the financing. (Italics added.) The plain meaning of the phrase “all claims and defenses which the debtor could assert against the seller” encompasses not only the defensive claims that a buyer might have but also includes causes of action that a buyer might assert against the seller. “The clear and unambiguous lan-guage of the contractual provision notifies all potential holders that, if they accept an assignment of the con-tract, they will be ‘stepping into the seller’s shoes.’ The creditor/assignee will become ‘subject to’ any claims or defenses the debtor can assert against the seller. The notice does not say that a seller will be liable for the buyer’s damages only if the buyer received little or nothing of value under the contract. Nor does the notice purport to limit a creditor/assignee’s liability in such fashion.” ( Oxford Finance Companies, Inc. v. Velez (Tex.App.1991) 807 S.W.2d 460, 463.) Thus, we agree with the FTC’s recent explanation that “[a] creditor or assignee of the contract is thus subject to all claims or defenses that the consumer could assert against the seller. The Holder Rule does not create any new claims or defenses for the consumer; it simply protects the consumer’s existing claims and defenses.” (Federal Trade Commission Advisory Opinion (May 3, 2012), at p. 2.)

The Court of Appeal also found that a demurrer was not the proper means to test the sufficiency of the pre-CLRA notice, when the Complaint pleaded that such notice had been sent.