What potential consequence exists for creditors not complying with Regulation Z?

The correct choice highlights that creditors who fail to comply with Regulation Z can indeed face penalties and legal actions. Regulation Z is designed to protect consumers by ensuring they receive clear and accurate information about credit terms and costs. If creditors do not adhere to these guidelines, they may incur significant consequences, including monetary penalties imposed by regulatory agencies, potential lawsuits from consumers, and damage to their business reputation.

The regulation emphasizes transparency and consumer protection, making compliance crucial for creditors. Non-compliance can lead to serious repercussions, such as being ordered to pay restitution to consumers or facing sanctions from regulatory bodies. Thus, the negative outcomes of failing to comply serve as a strong motivator for creditors to adhere to the regulations established under Truth in Lending.