Biting the (Loan) Sharks: Why the Truth in Lending Act Currently Fails in Its Goal to Promote Well-Informed Consumer Credit Decisions, and How Greater Allowance of Statutory Damages May Improve Its Effectiveness

Current state and local payday loan regulations purport to protect payday loan borrowers through decreasing payday loan presence in credit markets. These regulations appear to be based on a simple premise: "How can payday lenders harm consumers if consumers are less able to find a payday loan?" This Note argues payday loan borrowers are often choosing to take on such loans because it is the best source of available credit. State and local regulations, then, too often take away this option and force would-be payday loan borrowers to even more expensive alternatives, such as bouncing checks and making late bill payments. The federal Truth in Lending Act ("TILA") properly focuses federal regulation not on decreasing the supply of payday loans in credit markets, but in ensuring lenders provide borrowers with adequate disclosures related to payday loans. However, TILA currently provides plaintiff-borrowers with inadequate opportunity to recover statutory damages for lender violations. Instead, plaintiff-borrowers are often required to show actual damages. This Note argues that TILA should be amended to provide plaintiff-borrowers with greater ability to recover statutory damages through TILA, and provides a legislative suggestion modeled after the Telephone Consumer Protection Act.