/* Here's the full text of the Federal Trade Commission's Holder 
in Due Course Rule. This is one of consumer's most important 
protections in the never ending battle between consumer's rights 
and bad business. Under this rule, virtually every consumer 
transaction in which a loan is made, if the finance contract is 
assigned to a lender, then the lender IS SUBJECT TO ALL OF THE 
CLAIMS that the consumer has against the original seller. This 
means that if you enter into an agreement and then properly 
refuse to pay because the merchandise is defective, then if the 
finance contract has been assigned, you nevertheless may assert 
the same claims against the holder of the contract. In other 
words, in a consumer transaction where this notice appears, a 
bank or other lender that later purchases your finance contract 
cannot tell you to bring your complaints against the original 
seller, and that it's not their problem-- because it is. Of 
course, a business transaction is NOT subject to these rules. */

           Part 433 of 16 Code of Federal Regulations
         PRESERVATION OF CONSUMERS' CLAIMS AND DEFENSES

Section 433.1

Definitions-

     (a) "Person." An individual, corporation, or any other 
business entity. 

     (b) "Consumer." A natural person who seeks or acquires goods 
or services for personal, family, or household use.

     (c) "Creditor." A person who, in the ordinary course of 
business, lends purchase money or finances the sale of goods or 
services to consumers on a deferred payment basis. Provided, such 
person is not acting, for the purposes of a particular 
transaction, in the capacity of a credit card issuer.

     (d) Purchase money loan." A cash advance which is received 
by a consumer in return for a "Finance Charge" within the meaning 
of the Truth in Lending Act and Regulation Z, which is applied, 
in whole or in substantial part, to a purchase of goods or 
services from a seller who (1) refers consumers to the creditor 
or (2) is affiliated with the creditor by common control, 
contract, or business arrangement.

     (e) "Financing a sale." Extending credit to a consumer in 
connection with a "credit sale" within the meaning of the Truth 
in Lending Act and Regulation Z.

     (f) "Contract." Any oral or written agreement, formal or 
informal, between a creditor and a seller, which contemplates or 
provides for cooperative or concerted activity in connection with 
the sale of goods or services to consumers or the financing 
thereof.

     (g) "Business arrangement." Any understanding, procedure, 
course of dealing, or arrangement, formal or informal, between a 
creditor and a seller, in connection with the sale of goods or 
services to consumers or the financing thereof.

     (h) "Credit card issuer." A person who extends to 
cardholders the right to use a credit card in connection with 
purchases of goods or services.

     (i) "Consumer credit contract." Any instrument which 
evidences or embodies a debt arising from a "Purchase Money Loan" 
transaction or a "financed sale" as defined in paragraphs (d) and 
(e) of this section.

     (j) "Seller." A person who, in the ordinary course of 
business, sells or leases goods or services to consumers.

Section 433.2

Preservation of consumers' claims and defenses-

     In connection with any sale or lease of goods or services to 
consumers, in or affecting commerce as "commerce" is defined in 
the Federal Trade Commission Act, it is an unfair or deceptive 
act or practice within the meaning of section 5 of that Act for a 
seller, directly or indirectly, to:

/* Every sale of something by a person in the business of selling 
is going to affect commerce, since they have used the telephones, 
mails or other instrumentalities of commerce at least once, or, 
at least, have had a customer from across a state line or a 
delivery from across a state line. */

     (a) Take or receive a consumer credit contract which fails 
to contain the following provision in at least ten point bold 
face, type:

                             NOTICE

     ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO 
ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE 
SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE 
PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT 
EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.

or,

     (b) Accept, as full or partial payment for such sale or 
lease, the proceeds of any purchase money loan (as purchase money 
loans is defined herein), unless any consumer credit contract 
made in connection with such purchase money loan contains the 
following provision in at least ten point, bold fact, type:

                             NOTICE

     ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO 
ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE 
SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE 
PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT 
EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.