The Holder Rule is one of the most important actions the Commission has ever taken in preventing and remedying unfair and deceptive practices in the marketplace. When a seller of a good or service originates or helps arrange credit, the Rule allows consumers to raise the seller’s misconduct as a basis for bringing claims or defenses against the entity holding the debt. Specifically, the Rule requires a notice in the credit documents that assignees in credit sales and direct lenders related to sellers are subject to claims and defenses that the consumer has against the seller of the goods or services. Thus for virtually all consumer transactions, from car loans to private student loans to home improvement contracts, consumers have a viable consumer remedy for seller misconduct even when their obligation is owed to a creditor and not to the seller.
