Lenity, Chevron Deference, and Consumer Protection Laws

Several federal statutes, including the Real Estate Settlement Procedures Act (“RESPA”), the Truth in Lending Act (“TILA”) and the Servicemembers Civil Relief Act (“SCRA”) permit the government to seek either civil or criminal penalties for the same conduct. While the executive branch has used its ability to promulgate regulations, publish policy statements and initiate enforcement actions to expand the scope of these laws, a recent decision from the Sixth Circuit should give the government pause.

In Carter v. Welles-Bowen Realty Inc., no. 10-3922 (6th Cir. Nov. 27, 2013), the plaintiffs purchased a home through Welles-Bowen Realty and used Welles-Bowen’s title company, WB Title, for title search services. Dissatisfied with the fact that WB Title contracted out some of the title work to a third company, the plaintiffs sued all three companies under Section 8 of RESPA. Section 8 prohibits the payment of referral fees in connection with real estate settlement services, including title searches.