In Gregory v. Metro Auto Sales, Inc., 2016 WL 336861, at *2-3 (E.D.Pa., 2016), Judge McHugh found that a car dealer who allegedly inflated the purchase price of automobiles to offset inflated trade-in credits the dealer gave to the purchasers did not violate TILA.

Count I of Plaintiff’s Complaint alleges Defendant violated the Truth in Lending Act (“TILA”). Congress adopted the TILA and authorized the Bureau of Consumer Financial Protection to promulgate regulations to implement it “to promote the informed use of consumer credit by requiring disclosures about its terms and cost.” 12 C.F.R. § 1026.1. Regulation Z, which implements the TILA, requires companies that provide credit to disclose any “finance charge” for the credit. 12 C.F.R. § 1026.18. A “finance charge” is “the dollar amount the credit will cost” a consumer. Id. Plaintiff contends that the $4,500 Defendant reported on the RISC was “fictitious” and was actually “an additional charge to plaintiff to secure financing.” Compl. at ¶ 43. Plaintiff believes this amount was a “finance charge” that should have been disclosed as such to Plaintiff. By failing to identify it as such, Plaintiff asserts that Defendant violated the TILA and that Defendant is therefore liable to Plaintiff under the TILA’s private remedy. 15 U.S.C. § 1640(a) (providing civil liability for failure to comply with TILA requirements). I cannot accept Plaintiff’s categorization of the $4,500 trade-in amount as a “finance charge.” It is reasonable, from one perspective, to view the $4,500 trade-in value as some variety of charge imposed on Plaintiff. If the true value of Plaintiff’s trade-in vehicle was far less than $4,500, and Defendant increased the cash price of Plaintiff’s new car to compensate for overpaying Plaintiff for his trade-in, then the amount by which Defendant inflated the cash price of the new car can fairly be deemed a charge.  But not every charge is a finance charge. Regulation Z, promulgated by the Federal Reserve Board, is considered an authoritative interpretation of TILA. The Board-published official staff commentary to Regulation Z is dispositive in TILA cases unless the commentary is demonstrably irrational. Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 565–68 (1980). Regulation Z specifically exempts from the definition of “finance charges” “any charge of a type payable in a comparable cash transaction.” Here, the charge that compensated for over-valuing the trade-in vehicle would have been, under the facts Plaintiff has alleged, equally applicable to consumers paying cash for a new vehicle. Plaintiff argues that “the $4,500 Cash for Clunkers program’s purpose is to secure credit for cash poor borrowers with fictitious trade-in equity” and therefore “such a program would play no role in a cash transaction.” Pl. Opp. to Mot. to Dismiss at 6. This argument fails because the availability of the $4,500 trade-in was not contingent on a consumer’s use of credit. Compl. at ¶ 8–9. A sum that a consumer must pay whether a consumer is paying in cash or with credit is not a “finance charge.”   Other courts facing similar claims have reached the same result. Slover-Becker v. Pitre Chrysler Plymouth Jeep of Scottsdale, Inc., 409 F. Supp. 2d 1158, 1165 (D. Ariz. 2005) (“The cash price was clearly inflated; however, … the Staff Interpretation permits a creditor to include charges that are equally imposed on cash and credit transactions to be included in the cash price.”); Bledso Dodge, L.L.C. v. Kuberski, 279 S.W.3d 839, 843–44 (Tex. App. 2009) (“The $6,100 was not a charge incurred because Kuberski was a credit customer …. It was not an amount payable by him and imposed by the creditor as an incident or condition of the extension of credit.”).  In reaching this result, I have reviewed the staff Commentary to Regulation Z in the separate but conceptually analogous context of “negative equity,” where a pre-existing lien on a vehicle being traded in exceeds its fair market value. In explaining the obligation of dealers in such circumstances, where the overall price is being artificially adjusted upward, Federal Reserve staff issued the following revised comment:  “Content of Disclosures, 18(c) Itemization of Amount Financed.  Comment 18(c)–2 is revised in response to requests for guidance by creditors offering credit sales when downpayments involve a trade-in and an existing lien that exceeds the value of the trade-in. (See comment 2(a)(18)–3, where a consumer owes $10,000 on an existing automobile loan and the trade-in value of the automobile is $8,000, leaving a $2,000 deficit.)”  The amount by which the lien exceeds the trade-in value would be reflected in the amount financed. (See § 226.18(b).) Assuming the cash price for the new car was $20,000, the amount financed would be $22,000 ($20,000 representing the cash price plus $2,000 representing the excess of the lien over the trade-in value financed by the creditor.)  The regulation provides great flexibility for disclosing the itemization of amount financed. Comment 18(c)–2 iii… is revised to clarify that any amounts financed by the creditor and representing the excess of the lien over the trade-in value ($2,000 in this example) must appear in the itemization of the amount financed. However, creditors may also add other categories to explain, in this example, the consumer’s trade-in value of $8,000, the creditor’s payoff of the existing lien of $10,000, and the resulting amount of $2,000 included in the amount financed.  Truth in Lending, 63 Fed.Reg. 16,669, 16,673 (April 6, 1998)(emphasis added), cited by Fitts v. King Richard’s Auto Ctr., Inc., No. C.A. 07-147ML, 2009 WL 256379, at *3 (D.R.I. Feb. 3, 2009).  That approach comports with Defendant’s action here. The focus of the TILA is full disclosure of all terms and charges. The value of the trade-in, and (by Plaintiff’s theory) resulting inflation of the sale price, were fully set forth in the RISC. Regardless of whether Plaintiff was unfairly taken advantage of in the overall transaction, I do not see a violation of the TILA. See Fitts, 2009 WL 256379, at *3. All of the financial terms of the transaction were set forth in full. Plaintiff’s TILA claim will be dismissed.