Mass. Gen. Laws ch. 140D, § 6 – Inaccurate disclosure of finance charge or annual percentage rate; adjustment

(1) In carrying out the enforcement provisions of this chapter, or any rule or regulation issued thereunder, the commissioner, in cases where an annual percentage rate or finance charge was inaccurately disclosed, shall notify the creditor of such disclosure error and is authorized in accordance with the provisions of this section to require the creditor to make an adjustment to the account of the person to whom credit was extended, to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. For the purposes of this section, except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit was extended, in determining whether a disclosure error has occurred and in calculating any adjustment, (A) the commissioner shall apply (i) with respect to the annual percentage rate, a tolerance of one-quarter of one per cent more or less than the actual rate, determined without regard to subsection (c) of section five, and (ii) with respect to the finance charge, a corresponding numerical tolerance as generated by the tolerance provided under this section for the annual percentage rate; except that (B) with respect to transactions consummated after April first, nineteen hundred and eighty-two, the commissioner shall apply (i) for transactions that have a scheduled amortization of ten years or less, with respect to the annual percentage rate, a tolerance not to exceed one-quarter of one per cent more or less than the actual rate, determined without regard to said subsection (c) of section five, but in no event a tolerance of less than the tolerances allowed under said subsection (c), (ii) for transactions that have a scheduled amortization of more than ten years, with respect to the annual percentage rate, only such tolerances as are allowed under said subsection (c), and (iii) for all transactions, with respect to the finance charge, a corresponding numerical tolerance as generated by the tolerances provided under this section for the annual percentage rate.
(2) The commissioner shall require such an adjustment when it is determined that such disclosure error resulted from (A) a clear and consistent pattern or practice of violations, (B) gross negligence, or (C) a willful violation which was intended to mislead the person to whom the credit was extended. Except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit was extended, the commissioner need not require such an adjustment if he determines that such disclosure error:
1. (A) resulted from an error involving the disclosure of a fee or charge that would otherwise be excludable in computing the finance charge, including but not limited to violations involving the disclosures described in subsections (b), (c) and (d) of section four, in which event the commissioner may require such remedial action as he determines to be equitable, except that for transactions consummated after April first, nineteen hundred and eighty-two, such an adjustment shall be ordered for violations of subsection (b) of section four;
2. (B) involved a disclosed amount which was ten per centum or less of the amount that should have been disclosed and (i) in cases where the error involved a disclosed finance charge, the annual percentage rate was disclosed correctly, and (ii) in cases where the error involved a disclosed annual percentage rate, the finance charge was disclosed correctly; in which event the commissioner may require such adjustment as he determines to be equitable;
3. (C) involved a total failure to disclose either the annual percentage rate or the finance charge, in which event the commissioner may require such adjustment as he determines to be equitable; or
4. (D) resulted from any other unique circumstance involving clearly technical and nonsubstantive disclosure violations that do not adversely affect information provided to the consumer and that have not misled or otherwise deceived the consumer.
  In the case of other such disclosure errors, the commissioner may require such an adjustment.
(3) Notwithstanding the provisions of subsection (2):
1. (A) the commissioner shall require the full adjustment, but permit the creditor to make the required adjustment in partial payments over an extended period of time which the commissioner considers to be reasonable, if it would have a significant adverse impact upon the safety or soundness of the creditor, (B) no adjustment shall be ordered if the amount of the adjustment would be less than one dollar, or (C) no adjustment shall be ordered except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit was extended, as follows:
  1. (i) except in connection with violations arising from practices identified in the current examination and only in connection with transactions that are consummated after the date of the immediately preceding examination, except that where practices giving rise to violations identified in earlier examination have not been corrected, adjustments for those violations shall be required in connection with transactions consummated after the date of the examination in which such practices were first identified; and
  2. (ii) in no event four years after the cause of action accrues.
(4) A creditor shall not be subject to an order to make an adjustment, if within sixty days after discovering a disclosure error, whether pursuant to a final written examination report or through the creditor's own procedures, the creditor notifies the person concerned of the error and adjusts the account so as to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower.