Chapter 26 - Government Regulation and Property Flashcards
unfair practices
the federal trade commission (FTC) prohibits “unfair and deceptive acts or practices” A practice is unfair if it violates public policy or if it meets all of the following three tests:
- it causes a substantial consumer injury
- the harm of the injury outweighs any countervailing benefit
- the consumer couldn’t to reasonably avoid the injury
deceptive advertisement
the FTC considers an advertisement to be deceptive if it contains an important misrepresentation or omission that is likely to mislead a reasonable consumer
consumer financial protection bureau (CFPB)
the CFPB is charged with regulating consumer financial products and services, including mortgages, credit cards, and checking accounts. The CFPB has the authority to take action those committing “abusive acts” against consumers
bait and switch
FTC rules prohibit bait and switch advertisements. A merchant may not advertise a product and then disparage it (or make it unavailable) to consumers in an effort to sell a different item
merchandise bought by mail, by telephone
under FTC rules for this type of merchandise, sellers must ship an item within the time stated or, if no time is given, within 30 days after receipt of the order
do not call registry
the FTC prohibits telemarketers from calling or texting any telephone numbers listed on its do not call registry
telemarketing
the telephone consumer protection act (TCPA) prohibits telemarketers from making autodialed and/or prerecorded calls or texts to cell phones and prerecorded calls to residential land lines unless the consumer unambiguously consents in writing
unordered merchandise
consumers may keep as a gift any unordered merchandise that they receive in the mail
door to door rules
under the FTC door-to-door rules, a salesperson is required to notify the buyer that she has the right to cancel the transaction prior to midnight to of the third business day thereafter
payday loans
these high-interest-rate loans violate the usury law in some states
truth lending act (TILA)
in all loans regulated by TILA, the disclosure must be clear and in meaningful sequence. The lender must disclose the amount financed, the total of payments, the finance charge, and the annual percentage rate
mortgages
lenders must make a good-faith effort to determine whether a borrower can afford to repay the loan. they may not coerce or bribe an appraiser into misstating a home’s value. Nor may they charge prepayment penalties on adjustable-rate mortgages
qualified mortgages
if lenders give a qualified mortgage, they are deemed to have compiled with TILA
home equity loans
in the case of a high rate home equity loan, the lender must notify the consumer at least three business days before the closing that
- he does not have to go through with the loan (even if he has signed the loan agreement)
- he could lose his house if he fails to make payments.
If the duration of a high-rate home equity loan is less than five, it may not contain balloon payments
rescinding a mortgage
if a lender violates any provisions of TILA, consumers have the right to rescind a mortgage (other than a first mortgage) for three business days after the signing if the lender is not the same as for the first mortgage. If this lender violates the disclosure provisions of TILA, the consumer may rescind for up to three years from the date of the mortgage
credit card fees
credit card companies are not allowed ti increase fees and interest rates on any charges already incurred (until a cardholder has missed two consecutive payments). Such increases are only permitted for future purchases and only if the company gives the consumer 45 days notice and permits cancellation of the card
Debit and ATM card fees
banks may not overdraw an account and charge an overdraft fee unless the consumer signs up for an overdraft plan
prepaid debit card fees
issuers must disclose all fees before a consumer buys a card
loss protection for credit cards and Apple Pay
a credit card holder is liable for only the first $50 in unauthorized charges made before the credit card company is notified that the card was stolen
loss protection for debit, prepaid, and ATM cards, Venmo, and google pay
if the consumer reports the theft of a debit or ATM card within two days of discovering its the bank must make good on all losses above $50. If the consumer waits more than two days, the bank will only replace stolen funds above $500. if the consumer waits more than 60 days after receipt of the bank statement, the bank is not responsible for any losses.
loss protection for gift cards
gift cards have no loss protection
credit card disputes with a merchant
in the event of a dispute between a customer and a merchant, the credit card company cannot bill the customer if:
- she makes a good faith effort to receive the dispute
- the dispute is for more than $50, and
- the merchant is in the same state where she lives or is within 100 miles of her home
in practice, the credit card companies typically ignore the requirements that the merchant be in the same state or within 100 miles of the consumer’s home
disputes with a credit card company
under the Fair credit billing act (FCBA), a credit card company must promptly investigate and respond to any consumer complaints about a credit card bill
electronic funds
a consumer can stop payment on a transfer by oral or written notice up to three business days before the scheduled date
errors in electronic fund transfers
if a consumer reports an unauthorized electronic funds withdrawal within 60 days of the date of the bank statement, she is not liable
consumer reports
under the fair credit reports act (FCRA):
- a consumer report can be used only for a legitimate business need
- a consumer reporting agency cannot report obsolete information
- an employer cannot request a consumer report on any current or potential employee without the employee’s permission and
- anyone who makes an adverse decision against a consumer because of a credit report must reveal the name and address of the reporting agency that supplies the negative information
obtaining credit reports
under the fair and accurate credit transaction act (FACTA), consumers have the right to obtain one free credit report every year from each of the three major reporting agencies. Also, anyone who penalizes a consumer because of her credit score must provide it to her at no charge
debt collector
under the Fair Debt Collection Practices Act (FDCPA) a debt collector may not harass or abuse debtors
credit discriminators
the Equal Credit Opportunity Act (ECOPA) prohibits any creditor from discriminating against a borrower in the basis of race, color, religion, national origin, sex, marital status, or age or because the borrower s receiving welfare
warranties
the Magnuson-Moss Warranty Act requires any seller that offers a written warranty on a consumer product to disclose the terms of the warranty in simple and readily understandable language
consumer product safety
the Consumer Product Safety Commission evaluates consumer products and develops safety standards, under the consumer product safety act (CPSA), manufacturers must report all potentially hazardous product defects within 24 hours of discovery
