Consumer Protection Laws Flashcards
Your Credit Rights Law
Congress passed the Fair Credit Reporting Act (FCRA) in 1971 and subsequently amended it to help ensure that consumers’ credit reports are accurate. Under the FCRA, you have the right to view your credit report and you should do so, since almost half of all credit reports contain inaccurate, misleading, or obsolete material. The FCRA also requires that employers get written permission from current or prospective employees before reviewing their credit files. In addition, it allows consumers to sue creditors if reporting errors are not corrected.
The Fair and Accurate Credit Transactions Act allows individuals to request a free copy of their credit report once a year, from the three major credit-reporting companies. Call 877-322-8228 or go to Annual Credit Report.com to request one.
Equifax - 800-525-6285
Experian - 888-397-3742
TransUnion - 800-680-7289
Truth in Lending Law
Passed in 1968, the Truth in Lending Act requires lenders to disclose the true cost of consumer credit, explaining all charges, terms and conditions involved. The provisions of the Act state that:
Consumers must be provided with the total finance charge and annual percentage rate (APR) on the loan.
If credit life insurance is required for a loan, the cost of the insurance must be disclosed.
A three-day right of rescission must be included in any loan agreement when the borrower uses his home for collateral.
Employers cannot garnish more than 25% of an employee’s take home pay to repay debts.
A cardholder’s maximum liability is limited to $50.00 for each lost or stolen credit card.
Installment credit contracts must be written in plain English so that consumers can understand the terms
Fair Credit Billing Act
sets procedures for correcting billing errors on open credit accounts. It also allows consumers to withhold payment for defective goods purchased with a credit card. In addition, it sets limits on the time some information can be kept in your credit file.
Equal Credit Opportunity Act
prohibits credit discrimination by banks and credit card companies on the basis of sex and marital status. It also requires lenders to provide a written statement explaining any adverse action taken.
The Equal Credit Opportunity Act was amended in 1977. The amendment prohibits credit discrimination based on race, national origin, religion, age, or receipt of public assistance.
Fair Debt Collection Practices Act
prohibits unfair, abusive, and deceptive practices by debt collectors, and establishes procedures for debt collection. Credit card, auto loans, medical bills, student loans, mortgage and other household debts are covered under this act but business debts are not.
Debt collectors must send a written “validation notice” within 5 days of contacting you which says how much you owe, the name of the creditor, and what to do if you dispute the debt. The following rules apply to debt collectors:
They can only discuss your debt with you or your spouse.
They cannot contact you before 8am or after 9pm unless you consent.
They cannot misrepresent themselves, harass you, threaten violence or harm, use obscene language, or claim you will be arrested.
They cannot call you at work if they are told not to
You may send a certified letter with a return receipt asking the debt collector to stop contacting you. The collector can only confirm that he or she will stop contacting you or tell you a specific action, such as a lawsuit, will be taken.
If you are represented by an attorney, the debt collector must communicate with your attorney- not you.
Complaints about debt collection practices can be reported to the Federal Trade Commission.
Electric Fund Transfer Accountability
limits a bank customer’s liability if a debit or ATM card is lost or stolen. The loss is limited to $50 if the bank is notified within 2 business days, and loss is limited to $500 if notified within 3- 59 days. A customer is liable for unlimited losses if the lost card is not reported within 60 days.
Fair Credit and Charge Card Disclosure Act
requires credit card companies to disclose information about the terms, fees, and interest rates that pertain to their credit cards.
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The purpose of the CFPB is to create a single point of accountability in the federal government for consumer financial protection. The CFPB’s responsibilities include educating consumers, enforcing federal financial laws and conducting research that benefits consumers.
The Gramm-Leach Bliley Financial Modernization Act
The Gramm-Leach Bliley Financial Modernization Act of 1999 contains provisions that safeguard the privacy of consumer information held by financial institutions. These provisions protect an individual’s personal financial information by placing restrictions on when firms can disclose this information to others. The GLB Act requires that financial institutions send privacy notices to consumers that explain their information-sharing practices, and which give individuals an opportunity to “opt-out” or decline to have some of their personal information shared with third parties.
Consumer Vs. Customer
The GLB Act contains different provisions for those individuals who are “consumers” or “customers” of a financial institution.
A consumer is an individual who has purchased a product or service from a financial company for their personal, family or household use. An example is someone who cashes a check with a check-cashing company.
A customer is an individual who establishes an on-going relationship with a financial company, who may also buy financial products or services as part of that relationship. An example is someone who is a client of a wealth management firm.
It is important to recognize who is a consumer and who is a customer, since only customers of financial institutions will receive privacy notices initially and annually. Consumers only receive privacy notices when the financial institution intends to disclose their non-public personal financial information to nonaffiliated third parties. Privacy notices must be written in a format that the individual can easily retain for their records.
