What is the maximum criminal liability for a willful and knowing violation of TILA Reg Z?

A willful and knowing violation of the Truth in Lending Act (TILA) as outlined in Regulation Z can result in significant penalties because it reflects a serious breach of consumer protection laws designed to ensure that consumers are fully informed about the costs and terms of credit. The maximum criminal liability established for such violations includes a potential fine and imprisonment, which underscores the importance placed on adherence to the regulations.

The correct choice indicates a maximum penalty of a $5,000 fine and up to 1 year of imprisonment, or a combination of both. This reflects the regulatory framework's intent to deter reckless or intentional misconduct that could harm consumers. By imposing criminal liability, TILA seeks to promote accountability among lenders and protect consumers from unfair lending practices. This approach emphasizes that violations are not just administrative errors but serious offenses that can significantly impact individuals seeking credit.

Other options either understate the potential penalties or misrepresent the structure of liability under TILA, failing to align with the specified legal consequences for willful violations.