Goals and Objectives

Goals for today’s lesson:

1. Review laws related to consumer protection in the lending and credit industry

Objectives:1. Understand

consumer rights regarding credit

Consumer Rights

Consumer Credit Protection Act (Truth in Lending Act-TILA)

Consumer Leasing ActFair Credit Reporting ActEqual Credit Opportunity ActCredit Repair Organization ActFair Credit Billing ActFair Debt Collection Practices ActFair and Accurate Credit Transaction Act (FACTA)Bankruptcy Reform ActCredit Card Accountability Responsibility and Disclosure

Act

Consumer Credit Protection Act (Truth in Lending Act)

Requires lenders to disclose in common language the “true cost” of credit

Disclosures must be made when credit is denied Disclosures must be “uniform” Creditors must tell consumer in writing the terms of the

deal BEFORE the deal is signed Disclosures must be clear, concise, and in a timely

manner In some cases, consumer can change mind on deal within

specified time period $50 maximum limit on amount of money cardholder is

responsible to pay in case of unauthorized use of card before consumer has notified card issuer

Consumer Leasing Act

Provides protection against unreasonable end of term changes in open-ended leases

Certain information on cost of terms must be grouped together and separated from other information on the lease◦What consumer will pay at lease signing◦Monthly/periodic payments during the

lease◦Other charges that consumer may face◦TOTAL amount consumer will pay over

lease term

Fair Credit Reporting Act (FCRA)

Requires CRAs to report accurate and complete information; consumers responsible to ensure accuracy

Consumer must be told each time information used against them with CRA contact info

Consumer may receive (1) free report each year; more free reports under certain circumstances

CRA must correct or delete inaccurate, incomplete, or unverifiable info within 30 days after notice from consumer

CRA must exclude information over 7 years old (10 yrs for bankruptcies)

Allows consumer OPT OUT (1.888.567.8688) from prescreened credit offers

Equal Credit Opportunity Act (ECOA)

Requires ALL applicants to be considered on actual qualifications for credit, not personal characteristics

Creditors may not refuse to consider income from retirement benefits, PT employment, or alimony/child support

Consumer must be notified within (30) days of decision

Credit Repair Organization Act

Protects public from unfair or deceptive advertising and business practices by CRO

Defines “credit repair” organizationsCRO must have written contract with

disclosures of terms and conditions of payment AND services; consumer has 3-day of rescission

Consumer can sue for fraud – 5-year statute of limitations

Fair Credit Billing Act (FCBA)

Establishes procedures to correct errors promptly and without damage to credit rating

Defines billing errorsConsumer must give written notice

within 60 days of receiving bill in question

Creditor must respond within (30) days and resolve dispute within two billing cycles (< 90 days)

Creditor cannot report as delinquent or place for collection while in resolution period

Fair Debt Collection Practices Act (FDCPA)

Applies to 3rd party collectors, not those to whom original debt is owed

Prohibits making threats, using/threatening violence, using profane/obscene language, continuously or repeatedly calling debtor

Contact may occur between 8AM-9PM in time zone of consumer

Debt must be validated by collector and burden of proof is on collector

Collectors cannot communicate with debtors represented by attorneys unless permission is granted

Fair and Accurate Credit Transactions Act (FACTA)

Enacted to help combat Identity Theft(1) free credit report per year @

www.annualcreditreport.com or 877.322.8228

Allows for fraud alerts, credit freezesDefines credit scoreLimits medical information in making

credit decisions

Bankruptcy Reform Act

Credit counseling must first be completed to determine bankruptcy filing eligibility

Most common types:◦Chapter 7 … assets liquidated to pay creditors◦Chapter 11 … business reorganization◦Chapter 13 … for consumers with regular

income to develop plan of repayment for all or part of debts over a period of time

Seek advice from a qualified attorney

Credit Card Accountability Responsibility and Disclosure Act

Creditors cannot :◦ generally raise interest rates during 1st year that acct is opened◦ raise rates on existing balances unless consumer is >60 days

late and must restore lower rate after 6 mos. of timely payments ◦ charge over-limit fees unless consumer approves the transaction

Creditors must:◦ apply payments above minimum amount first to higher-interest

balances◦ credit payments received by 5 PM◦ Deliver billing statements 21-days in advance of due date◦ Disclose on statements the period of time and total interest to

pay off debt using only minimum payment AND what payment would be required to pay off debt in 3 years

Consumers can cancel accounts before effective date of changes and creditor cannot require immediate repayment of entire balance

Let’s take a QUIZ!

3. What is the Fair Credit Reporting Act?a. A law that helps consumers correct errors on

billing statementsb. A law that helps consumers correct errors on

their credit reportc. A law that requires credit card companies to

disclose terms and conditionsd. A law that protect consumers against

discriminatione. All of the above

Questions?