Virachack v. University Ford

Malinee and Ritnarone Virachack (plaintiffs) purchased a vehicle from University Ford, a corporation doing business as Bob Baker Ford (Bob Baker) (defendant). The Virachacks paid a portion of the purchase price with credit at a promotional 0.9 percent interest rate—which was below market rate. The day that the Virachacks purchased their vehicle, Bob Baker had another promotion offering $2,000 rebates to customers who did not buy their vehicles at the 0.9 percent interest rate. The loan disclosure provided to the Virachacks by Bob Baker as required by the Truth in Lending Act and Regulation Z did not include the rebate that the Virachacks did not receive as a finance charge. The Virachacks filed a lawsuit in federal court against Bob Baker, alleging that Bob Baker violated the Truth in Lending Act by failing to disclose the rebate as a finance charge. The Virachacks reasoned that the rebate was a finance charge because it was not offered to customers who received a certain form of credit—the 0.9 percent interest rate—from Bob Baker. Bob Baker argued that the rebate was not a finance charge because it was not a condition of extending credit. Rather, Bob Baker classified the rebate as an alternate promotion to the promotional interest rate that the Virachacks received. The district court granted summary judgment for Bob Baker. The Virachacks appealed.