Code of the District of Columbia

§ 28–3809. Lender subject to defenses arising from sales.

(a) A lender who makes a direct installment loan for the purpose of enabling a consumer to purchase goods or services is subject to all claims and defenses of the consumer against the seller arising out of the purchase of the goods or service if such lender acts at the express request of the seller, and —

(1) the seller participates in the preparation of the loan instruments, or

(2) the lender is a person or organization controlled by or under common control with the seller, or

(3) the seller receives or will receive a fee, compensation, or other consideration from the lender for arranging the loan.

(b) The lender’s liability under this section may not exceed the amount of the loan. Rights of the debtor can only be asserted affirmatively in an action to cancel and void the sale from its inception, or as a matter of defense to or set-off against a claim by the lender.


(Dec. 17, 1971, 85 Stat. 671, Pub. L. 92-200, § 4.)

Prior Codifications

1981 Ed., § 28-3809.

1973 Ed., § 28-3809.