States are taking a more
active role in protecting non-English speaking consumers by requiring
financial institutions to provide translations of contracts before the
customer signs. California is leading the way, but existing laws in
other states can also be troublesome. Here’s what lenders should know.
By Vincent A. Ruiz,
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A recent television commercial for Berlitz, the international translation and interpretation service, opens with a German Coast Guard dispatcher quickly explaining to a fresh-faced recruit the layout of the control-room equipment. Speaking in their native tongue, the dispatcher wishes the young man good luck and leaves the room. Almost instantly the recruit receives a radio call, in English, from a British ship in distress. The caller cries out the international “May Day” signal, anxiously but methodically explaining, “We are sinking, we are sinking!” With equal deliberation, the young man earnestly responds in accented English: “Hello? This is the German Coast Guard. What are you sinking about?”
Few examples could better make the case that only an effective translation can literally save the day. In the world of everyday commerce, the need for precise translations is no less important to the financial services industry. Financial institutions, mortgage lenders, securities brokerage firms. and automotive dealerships increasingly deal with their actual and potential customers exclusively in languages other than English. In response to this market-driven trend, states such as California, Arizona, and Texas have determined as a matter of public policy to provide consumer protection for the growing segments of the population who speak little or no English.
In California, if a lender negotiates the terms of a contract primarily in Spanish or in one of several specified Asian languages, the lender is required to provide a translation of the contract into the foreign language before the customer signs the English language contract. Noncompliance—indeed, even half-hearted compliance—can be costly: the customer can rescind (or “repudiate”) the contract if a court determines that the parties never entered into a “meaningful” agreement because there was a “substantial difference” between the material terms and conditions of the contract and the translation (Cal. Civil Code § 1632(j)).
Aside from contracts, lenders routinely must provide their customers with disclosures required under a myriad of federal and state laws and regulations. Among these is Regulation Z, which implements the federal Truth in Lending Act (15 U.S.C. § 1601, et seq). Oddly, Regulation Z merely permits a lender to furnish the disclosures required by the regulation in a language other than English, so long as the lender complies with any request by the consumer to obtain an English language version of the disclosures (12 C.F.R. § 226.27). Although the act provides civil and criminal penalties for a creditor’s failure to comply with the disclosure requirements, it is silent as to the effect of an inadequate translation of those disclosures into the language “other than English.” California’s Civil Code section 1632 represents an attempt fill that void by affording to the consumer a remedy of rescission in cases where the translation of the Regulation Z disclosures fails to meet the statute’s “meaningfulness” standard (Cal. Civil Code § 1632(e)).
California presently is unique in providing a specific remedy to customers who can show they failed to comprehend the translated contract or disclosure in a meaningful way. Lenders conducting business in other states, however, can take little comfort from this fact. Claims that a language barrier rendered the transaction unlawful can be based on state law principles of fraud in the inducement of a contract, as well as unfair business practices laws. Even where a lender voluntarily provides customer service communications or advertising materials in another language, crucial mistakes in the translation could result in text that is fraught with troublesome exaggerations, or worse, misleading statements. In short, a poor translation of a contract, disclosure or marketing piece can potentially expose the institution that produced it to unnecessary legal liability.
With “falsos amigos” like this, who needs enemies
Not surprisingly, in this country, Spanish is the predominant language into which documents of a legal import are regularly translated. Yet with equal frequency, the use of false cognates—words in different languages that originate from an identical root, but have divergent meanings—abounds in such translations. An “estimate,” for example, is una “estimaci”n” not the adjective “estimado”, which means “esteemed” or “respected”, and is used as a salutation in letters. Such false cognates, or “falsos amigos,” can appear in any context:
• Lenders may desire to provide a caveat to the translation indicating that the original English language version of a contract will “control” in the event of a dispute—meaning that a court ultimately will look to that document in its fundamental assessment of the parties’ rights and obligations. But it cannot be said that the English language document “tendrá control” (literally, will have “control over”), because what is meant is that the English version “regirá” (i.e., will be the “governing” document) in the court’s review of such rights and obligations.
• Promissory notes are notorious for their often convoluted legal language. They also commonly specify that if a check the borrower issues to make a loan payment is “not honored,” the lender can charge the borrower certain fees. To state, “si un cheque no es honrado, se le cobrará un cargo por cheque devuelto” is to state, “if a check is not [honorable, upright or fair], you will be charged a returned check fee.” To avoid the obvious awkwardness, the translation should state “si un cheque no es pagado . . .” (literally “not paid”), or even “si un cheque no es atendido . . .” (another way of indicating that payment was refused by the paying bank).
For beginning students of Spanish, false cognates can be a source of frustration in the road toward expanding one’s vocabulary. For institutions concerned with the legal implications of Spanish language documents they generate, the presence of “falsos amigos” must always be gauged for its potential to expose the institution to liability.
Can poor syntax undermine international remittances?
Another significant shortcoming in many legal translations is the attempt to track identically the original English syntax. In any Spanish sentence of at least mild complexity, the order of the words will rarely match that of the equivalent English. A simple case in point involves the two classes of Spanish adjectives, determinative and qualifying. In the former, the adjective precedes the noun (“my books” ? “mislibros”), whereas in the latter it generally follows the noun (“a largehouse” ? “una casa grande”).
English language legal writing is characterized by the overuse of conditional language (e.g., “except as otherwise provided herein”), superfluous words (e.g., “these provisions shall remain in full force and effect”) and lengthy passages, often in the passive voice. Perhaps as a result, even good translators feel compelled to mimic the exact syntax of the English source document—as if doing so will render the text more accurate. The consequences are often unfavorable, as seen in the following example.
In the highly competitive business of international remittance transactions, financial institutions arrange to have money transferred to the customer’s loved ones in a foreign country. At the end of the process, a specified U.S. dollar amount typically will have been converted to the currency of that foreign country, so that the recipient can readily obtain and use the funds. Although such institutions purchase the foreign currency at a wholesale rate of exchange (“un tipo de cambio mayorista”), they typically use a retail exchange rate (“un tipo de cambio minorista”) to effect the conversion.
Let’s say that in its customer disclosures, Bank ABC explains these rates and further indicates: “Any conversion difference between the retail rate and the wholesale rate will be retained by Bank ABC as revenue.” The translation may come out like this: “Cualquier diferencia de conversi”n entre el tipo de cambio minorista y el tipo de cambio mayorista será retenida por Bank ABC como ingreso.” This word-for-word translation is considerably flawed:
• Although the word “cualquier” indeed means “any,” English speaking attorneys routinely employ the word “any” to denote the terms “every” or “the entirety of” of a class of persons or things. (Consider the similarities between the sentences, “Any child can do that!” and “Any person who shall violate this provision shall be guilty of a misdemeanor.”) Because the term “cualquier” in our example can be read in a restrictive sense, referring to merely “one” among a possible variety of spreads in the exchange rates on a given day, the translation should state “toda diferencia” (focusing the meaning on a “total difference” in the rates of exchange).
• The phase “conversion difference” is itself an English language term of art with no real equivalent in Spanish. Instead of utilizing the meaningless expression “diferencia de conversi”n,” the translation needs to explain—in an active voice—that at the actual time of conversion Bank ABC will be keeping as revenue the full amount of the difference between the exchange rates.
Thus viewed, the disclosure is more accurately translated as follows: “Bank ABC retendrá como ingreso toda diferencia entre el tipo de cambio minorista y el tipo de cambio mayorista al realizarse la conversi”n.”
“Bad words” aren’t always expletives
To be sure, many legal translations are unsound simply because the translator failed to comprehend the meaning of crucial, technical legal terminology in the original English language document. This is not to chide translators: most are not lawyers trained in the U.S. legal system, just as few U.S. lawyers have backgrounds in foreign language legal vocabulary. Moreover, contextual subtleties involved when using legal terminology make the job of accurate translation more difficult.
Take, for example, a bank’s admonition to its customers who make certain electronic transfers: “You may not stop payment or seekreversal of the funds once the transfer is completed.” A proposed translation may state, “Una vez realizada la transferencia, no podrá suspender el pago ni procurar la revocaci”n de los fondos.” The use of “revocaci”n” seems reasonable because, among other things, the word can mean “reversal.” But when it acquires such a meaning, the term refers to an appellate court’s overturning of a lower court judgment. The gist of the admonition is instead that the customer may not request a return of the monies, once transferred. For this expression, one should employ the term “retrocesi”n”, which means a transfer of property back to the transferor (“ni procurar la retrocesi”n de los fondos”).
Whatever the explanation—astute business practices, complying with federal Community Reinvestment Act requirements—the reality is that the Spanish-speaking market is important to the financial services industry. At a time when the websites of many banks have become partially or completely available in Spanish, the FDIC in August 2006 announced that it had created a Spanish language video that explains the nature of FDIC coverage. These days, financial service providers should be doing more than just “sinking about” attracting non-English customers; they ought to be prepared to avoid potential legal problems in the process.
Vincent A. Ruiz is an attorney with Gutierrez. His practice includes assisting financial institutions in ensuring that their Spanish language translations are consistent with applicable law
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. “Authorship of this article does not create an attorney-client relationship, and the content is not legal advice.”
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