I’ve previously written about the Holder Rule as something to explore when you have a debt owed over a defective product, like school financed debt. Or maybe it is for something like student loan assistance services when the debt relief company folds.
The Holder Rule was originally issued by the Federal Trade Commission (FTC) and after a recent review, the FTC still stands behind this consumer rule.
The FTC just said, “The Rule, formally called the “Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses,” protects consumers when they purchase personal goods or services with money loaned by a merchant or by a lender who works with a merchant. The Rule requires that such loans include a provision that preserves consumers’ ability to raise the merchant’s misconduct as a reason for not repaying the loan, even if the loan is sold. The Rule prevents businesses from using financing mechanisms to collect debts from consumers in situations where the debt arises from a sale in which the merchant defrauded customers, failed to deliver the goods or services, or engaged in other misconduct.”
In fact, the FTC said it reviewed this 2012 opinion letter on the Holder Rule and still stands behind what they said at that time.
That opinion letter said, “The Holder Rule protects consumers who enter into credit contracts with a seller of goods or services by preserving their right to assert claims and defenses against any holder of the contract, even if the original seller subsequently assigns the contract to a third party creditor.”
The FTC statement also says, “A creditor or assignee of the contract is thus subject to all claims or defenses that the consumer could assert against the seller.” That sure sounds like the multiple people who are unhappy with Equitable Acceptance after they purchased student loan assistance contracts from some debt relief or doc prep companies.
But that’s just my opinion.