Consumer Rights Education
Related to Credit Card & Debt Settlements, Negotiations & Consolidation
The consumer rights and acts summaries listed below were provided
by the
FDIC. Consumers' financial rights are protected by federal and
state laws and
regulations covering many of the services offered by financial
institutions.
FEDERAL LAWS
Consumer Leasing Act (pdf)
The Consumer Leasing Act requires disclosure of information that
helps consumers compare the cost and terms of various leases and the
cost and terms of buying on credit versus cash. The Act does not
apply to real estate leases or to leases of four months or less.
Credit Practices Rule
The Credit Practices Rule prohibits lenders from using certain
remedies, such as confessions of judgment; wage assignments; and
nonpossessory, nonpurchase money, security interests in household
goods. The rule also prohibits lenders from misrepresenting a
cosigner's liability and requires that lenders provide cosigners
with a notice explaining their credit obligation as a cosigner. It
also prohibits the pyramiding of late charges.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act prohibits discrimination against an
applicant for credit because of age, sex, marital status, religion,
race, color, national origin, or receipt of public assistance. It
also prohibits discrimination because of a good faith exercise of
any rights under the federal consumer credit laws. If a consumer has
been denied credit, the law requires notification of the denial in
writing. The consumer may request, within 60 days, that the reason
for denial be provided in writing.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (redline version - over 200 pgs. pdf file) The Reform Act is the most recent revision of the Title 11 Bankruptcy Code (11 USC § 101 et seq). The passage of the Reform Act begins a new and challenging era in the evolution and development of bankruptcy law. The new law has made major substantive changes to Chapter 7 (Liquidation); Chapter 11 (Reorganization); Chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income); and Chapter 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code.
Fair Credit and Charge Card Disclosure Act (pdf)
The Fair Credit and Charge Card Disclosure Act requires new
disclosures on credit and charge cards, whether issued by financial
institutions, retail stores or private companies. Information such
as APRs, annual fees and grace periods must be provided in tabular
form along with applications and preapproved solicitations for
cards. The regulations also require card issuers that impose an
annual fee to provide disclosures before annual renewal. Card
issuers that offer credit insurance must inform customers of any
increase in rate or substantial decrease in coverage should the
issuer decide to change insurance providers.
Fair Credit Billing Act (pdf)
The Fair Credit Billing Act establishes procedures for the prompt
correction of errors on open-end credit accounts. It also protects a
consumer's credit rating while the consumer is settling a dispute.
Fair Credit Reporting Act (pdf)
The Fair Credit Reporting Act establishes procedures for correcting
mistakes on a person's credit record and requires that a consumer's
record only be provided for legitimate business needs. It also
requires that the record be kept confidential. A credit record may
be retained seven years for judgments, liens, suits, and other
adverse information except for bankruptcies, which may be retained
ten years. If a consumer has been denied credit, a cost-free credit
report may be requested within 30 days of denial.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act is designed to eliminate
abusive, deceptive and unfair debt collection practices. It applies
to third party debt collectors or those who use a name other than
their own in collecting consumer debts. Very few commercial banks,
savings banks, savings and loan associations, or credit unions are
covered by this Act, since they usually collect only their own
debts. Complaints concerning debt collection practices should
generally be filed with the Federal Trade Commission.
Home Equity Loan Consumer Protection Act (pdf)
The Home Equity Loan Consumer Protection Act requires lenders to
disclose terms, rates and conditions (APRs, miscellaneous charges,
payment terms, and information about variable rate features) for
home equity lines of credit with the applications and before the
first transaction under the home equity plan. If the disclosed terms
change, the consumer can refuse to open the plan and is entitled to
a refund of fees paid in connection with the application. The Act
also limits the circumstances under which creditors may terminate or
change the terms of a home equity plan after it is opened.
Real Estate Settlement Procedures Act (pdf)
The Real Estate Settlement Procedures Act requires that a consumer
be given advance information about the services and costs involved
in the closing of a residential mortgage. It also limits the amount
that can be collected for mortgage escrow.
Rights to Financial Privacy Act (pdf)
The Right to Financial Privacy Act provides that customers of
financial institutions have a right to expect that their financial
activities will have a reasonable amount of privacy from federal
government scrutiny. The Act establishes specific procedures and
exemptions concerning the release of the financial records of
customers and imposes limitations on and requirements of financial
institutions prior to the release of such information to the federal
government.
Truth in Lending Act (pdf),
Truth in Lending Act Amendments (pdf)
The Truth in Lending Act requires disclosure of the "finance charge"
and the "annual percentage rate"--and certain other costs and terms
of credit--so that a consumer can compare the prices of credit from
different sources. It also limits liability on lost or stolen credit
cards.
STATE LAWS
Many State Laws also provide rights and remedies in consumer financial transactions. Unless a state law conflicts with a particular federal law, the state law usually will apply. Some states have usury laws, which establish maximum rates of interest that creditors can charge for loans or credit sales. The maximum interest rates vary from state to state and depend upon the type of credit transaction involved.
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