Lesson 9-3 Consumer Protection LawsLEARNING GOALS

- LIST AND EXPLAIN CONSUMER PROTECTION LAWS THAT ARE RELATED TO CREDIT

- DISCUSS THE PROCESSES OF USING ALTERNATIVE DISPUTE RESOLUTION AND FIL ING A LAWSUIT

- RECOGNIZE CREDIT SCAMS AND WAYS TO PROTECT YOURSELF

Consumer Credit LawsInvestigate Credit Denials – it may because there is inaccurate information in your credit file.oThe Fair Credit Reporting Act grants you the right to know what is in your credit file.oYou have the right to have inaccurate data investigated, corrected, and deleted from your file, and the credit

bureau is required to issue a new report to creditors.o If the damaging information in your file is correct but misleading, you can write your own statement giving

your side of the issue.

Review your credit report – consumers have the right to one free copy of their credit reports annually.oRequest a credit report at AnnualCreditReport.com

Enroll in a credit protection service, which is a plan that provides credit monitoring for a fee. o The service will notify you of any changes to your credit file and let you know when anyone accesses your

credit file for any reason.

Consumer Credit LawsThe Consumer Credit Protection Act of 1968 (Truth-In-Lending Act) requires to fully inform consumers about the cost of credit in a loan or credit agreement. The agreement must contain the following:o Description of the item being purchasedo Cash price of the item being purchasedo Down payment or trade-in-priceo Amount financedo Any service fees or other costs being added to the priceo Finance Chargeo Annual percentage rateo Deferred-payment priceo Amounts and dates of paymentsoMethod of computing finance charges in case of early payoff

oThis act also limits a person’s liability to $50 after a credit card is reported lost or stolen.

Consumer Credit LawsThe Credit Card Act of 2009 (also known as the Credit Card Accountability, Responsibility, and Disclosure Act) is a comprehensive reform by credit card law to establish fair practices related to credit.oProtects consumers from arbitrary interest rate increases by giving cardholders advance

notice of increases and the right to cancel the cardoPrevents interest from being charged on purchases paid on time during the billing cycleoEliminates due-date gimmicks by requiring card companies to mail bills at least 21 days before

the due date.oRequests fair allocation of payments by applying them to higher-interest-rate balances first.oLimits fees card companies can chargeoRequires a minimum payment explanation oLimits credit cards issues to teens (under the age of 21) without a cosigner.

Consumer Credit LawsThe Fair Credit Billing Act sets requirement for resolving billing disputes.

The law applies to open-end credit, such as store or credit card accounts. It does not apply to installment loans.

A consumer has 60 days form the day a bill is received to file a dispute. Then the creditor has 30 days to respond.

Within 90 days after receiving the complaint, the creditor must either correct the error or show why the bill is correct.

This law helps consumers resolve errors on their accounts in a timely manner.

Consumer Credit LawsThe Equal Credit Opportunity Act protects consumers from discrimination in the granting or denying of credit based on o GenderoMarital Statuso Religiono National Origino Raceo Coloro Age

The Fair Debt Collection Practices Act protects consumers from abusive collection practices by creditors and collection agencies. Debt collectors must be sure the bill is accurate and allow the consumer to dispute it. Disputed amounts must be resolved before they can be collected.

Methods to Resolve Credit DisputesAlternative Dispute Resolution is a method of settling a dispute using a neutral third party. This is usually much cheaper than going to court and faster.oNegotiation occurs when two people get together, with or without a neutral third party, to

come to an agreement.oMediation, the next level of resolution, involves using a neutral third party to guide the

process. The mediator talks to both parties to hear both sides of the issue and then makes a proposed settlement.

oArbitration is the highest level of resolution. A third party, called an arbitrator, listens to both parties and then makes a decision. Arbitration may take months. Both sides present their case formally, and rules of law are followed. The arbitrator is a professional who know the law and is able to understand the issues.

Methods to Resolve Credit DisputesFiling a lawsuitSmall Claims Court is a simple and quick method of resolving a matter

involving a small amount.o The plaintiff files a document call a complainto The complaint is served on the defendanto The two parties appear before a judge, whose decision is final. Attorneys are not involved.o Process usually takes a few weeks to a few months.

Regular trial courts settle disputes involving larger dollar amounts.o Attorneys represent both sides.o If many consumers have similar complaints about the same defendant, a class action lawsuit may be

filed on behalf of all of them.o Process could take months and cost thousands of dollars in attorneys’ fees.

Credit ScamsCredit Repair is a scam in which a company claims to be able to “fix” your poor credit record and give you a clean credit history.oNo one can erase bad credit.oAdvice they give is free of charge from various government and nonprofit agencies.

Identity Theft occurs when someone uses your personal information without your permission to commit fraud or other crimes.oFastest growing crime in Americao If you are a victim of identity theft, take the following steps immediately:

1) Close credit and bank accounts2) Have a fraud alert placed on your credit reports3) File a complaint with the Federal Trade Commission4) File a report with your local police.5) Contact other government agencies.6) File a report with the Social Security Administration

Assignment Pg. 306 – do problems 1-11, 13, 16