AFSA Alerts the Federal Trade Commission about Holder Rule Effects
Last week, AFSA responded to the Federal Trade Commission’s (FTC) request for feedback about regulations that create impediments to competition. Our letter shared concerns about how the FTC has shifted policy regarding the Holder Rule in a manner that harms industry and consumers. The Holder Rule is a legal mechanism that makes certain servicers of financed purchase contracts responsible for claims that consumers might have against the original seller of purchased goods. Historically, that liability has been limited to the amount that the consumer agreed to pay on the finance contract. In recent years, the FTC has strayed from this principle and supported a new theory that the Holder Rule would also make companies liable for attorney’s fees, thus making the amount of potential liability unlimited.
AFSA’s letter explained the history of this policy shift and how the FTC exceeded its authority to promote an unprecedented interpretation of the Holder Rule. As a longstanding principle of law, the consumer finance industry understands the effect of Holder Rule liability on business and incorporates those considerations into pricing decisions. A change in policy making Holder Rule liability unlimited disrupts pricing and availability of credit, harming industry and consumers alike. As this change exceeds the FTC’s authority, AFSA encourages the FTC to reverse course.
June 2nd, 2025
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