America's Credit Unions and a coalition of state leagues called on the Federal Trade Commission (FTC) to withdraw recent guidance on the Holder Rule, warning it could significantly expand liability for credit unions and disrupt consumer lending.
In a joint letter to FTC Chairman Andrew Ferguson, the groups argued that the agency's 2022 interpretation of the Holder Rule, along with earlier staff guidance, improperly broadens the scope of lender liability by allowing recovery of attorneys' fees beyond amounts paid by borrowers.
The coalition said the original intent of the Holder Rule, established in 1975, was to cap a lender's liability at the amount a consumer paid under a contract. However, the more recent guidance has led to inconsistent court interpretations and, in some cases, significantly higher financial exposure for lenders.
Credit unions warned the change could have real-world consequences, particularly for indirect lending markets such as auto and solar financing. According to the letter, increased legal risk is already causing some institutions to tighten underwriting standards, raise rates or exit certain markets altogether.
The groups also criticized the FTC for issuing the guidance without formal rulemaking, arguing that any substantive changes should undergo a transparent regulatory process.
They urged the commission to restore a clear liability cap and provide regulatory certainty for lenders and consumers alike.
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