Goals and Objectives Goals for todays 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 Act Fair Credit Reporting Act Equal Credit Opportunity Act Credit Repair Organization Act Fair Credit Billing Act Fair Debt Collection Practices Act Fair and Accurate Credit Transaction Act (FACTA) Bankruptcy Reform Act Credit 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 ( ) 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 organizations CRO 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 errors Consumer 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 3 rd 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 or Allows for fraud alerts, credit freezes Defines credit score Limits 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 1 st 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

Lets take a QUIZ! 3. What is the Fair Credit Reporting Act? a. A law that helps consumers correct errors on billing statements b. A law that helps consumers correct errors on their credit report c. A law that requires credit card companies to disclose terms and conditions d. A law that protect consumers against discrimination e. All of the above

Questions?