Credit Laws Both State Credit Laws and Federal Credit Laws can be found below or visit: Law.CreditLibrary
Note: The summary or summaries of each law below is in no way a full, detailed report of the act and/or law. This was added to give a basic summary of each particular credit law. There were many descriptions and/or facts within the law, but in the interest of briefly summarizing each of the laws below, much of it was left out of the summary. However, if you click on the link to the various credit laws, you'll be taken to a section within our site where you can read each individual subsection.
SUBCHAPTER I - CONSUMER CREDIT COST DISCLOSURE
Part B - Credit Transactions
Part C - Credit Advertising
Part D - Credit Billing
Part E - Consumer Leases
SUBCHAPTER II - RESTRICTIONS ON GARNISHMENT Subsections: 1671 - 1677
SUBCHAPTER II-A - CREDIT REPAIR ORGANIZATIONS Subsections: 1679 - 1679j
SUBCHAPTER III - CREDIT REPORTING AGENCIES Subsections: 1681 - 1681x
SUBCHAPTER IV - EQUAL CREDIT OPPORTUNITY Subsections: 1691 - 1691f
SUBCHAPTER V - DEBT COLLECTION PRACTICES Subsections: 1692 - 1692p
SUBCHAPTER VI - ELECTRONIC FUND TRANSFERS Subsections: 1693 - 1693r
Truth In Lending Act
"Open-end" credit disclosures cover credit cards, open-end consumer credit transactions, and/or charge cards. These acts require specific disclosures before the initial disclosure statement for credit. Cardholder is given 15-days prior notice of a change in terms. Disclosures must be made in a clear manner and it must be made in writing.
Other than a "card renewal", this act prohibits issuing a credit card unless it is in response to written or oral agreementl.
Under the Home Ownership and Equity Protection Act of 1994 more disclosures were set. Creditors/lenders must now make additional disclosures as well as comply on specific practices (related to APR, points, fees, etc...) on closed-end home equity loans.
If a consumer credit advertiser uses specific triggering terms in their ads, they must also provide terms and/or additional information.
Sets a $50 maximum limit a cardholder is required to pay for the unauthorized use of a card
Fair Debt Collection Practices Act (FDCPA)
Debt included in this act: Family, household or personal debts - for example: credit card debt, any debts in relation to retail, auto loans, mortgage, second mortgage, or debts from medical care or medical expenses.
This act regulates or mandates the conduct of anyone collecting on the above listed types of debt. This includes collection agents/agencies, lawyers, and/or creditors.
Other Various Restrictions, such as:
No threats or slurs
No contacting any 3rd parties about the debt allegedly owed by you
Repeated phone calls or an unreasonable amount of calls
Call can only be between the hours of 8am & 9pm local time
No false representations are permitted and much more
Things a Debt Collector MUST tell you:
The amount of money you reportedly/allegedly owe
The name of the original creditor
They must tell you: you have within thirty days after receipt of the notice to dispute the validity of the debt or any portion thereof or the debt will be assumed valid by the debt collector
If you dispute the debt (in full or in part) within that thirty day period: the debt collector will obtain verification of the debt and mail it to you (the consumer)
Upon your written request within that thirty day period: the debt collector will provide you with the name and address of the original creditor (if different from the current collector)
Fair and Accurate Credit Transaction Act
Parts of this act includes: The prevention of identity theft victims, particularly, "fraud alerts" and "active duty alerts" as well as measures to reduce card information (credit and debit card account numbers) on printed receipts.
It also established the right to obtain 1 free credit report from each of the 3 major credit bureaus (Equifax, Experian, Transunion) per every 12 months.
The "red flag rule" was established. This rule requires the Federal Banking Agencies, the National Credit Union Administration, and the Federal Trade Commission to create regulations for banks, creditors and/or financial institutions regarding identity theft prevention. The "red flag rule" is/was intended to: "prepare a model summary of the rights of consumers ... with respect to the procedures for remedying the effects of fraud or identity theft..."
The bill also requires a secure method to dispose consumer information.
Credit Advertising Act
Parts of this act includes: Regulations on creditors advertising practices for various types of credit extensions (example: installment loans, credit cards/open ended, real estate, and oral agreements). All rates must be in the form of annual percentage rates (APR). Any minimum or fixed amounts owed, down payment (if applicable), loan fees, highest APR that may be imposed, as well as other terms must be clearly and conspicuously displayed on credit advertisements.
Parts of this act includes: A consumer must give written notice of any billing error in question within 60 days of receiving the bill and the creditor must respond to the written notice given by the consumer within 30 days. The dispute must be resolved within 2 billing cycles or no longer than 90 days. Within that 90 days, the creditor/lender must explain why it's correct or have the error corrected.
During the dispute/resolution period: no collection attempts can be made on the disputed bill, no adverse information can be reported to the credit reporting agencies, and there can be no finance charges for/on the disputed bill.
The account cannot be closed or restricted because of the customer's failure to pay on the disputed bill.
After the resolution period, if the customer believes the bill is still to be disputed, they must again notify the creditor/lender in writing. During this period, the lender/creditor cannot report this information unless they also report the amount is in dispute. The lender/creditor must provide to the customer, the name and address of each person the account is being reported delinquent to.
The lender/creditor must report to anyone who received a report on the delinquency on how the dispute was resolved.
Consumer Leases Act
Parts of this act includes: The lessor must disclose certain terms; some of the terms include: terms regarding payments, including: initial payment, required amount of each payment, payment due date(s), number of payments. It also requires terms (in writing) for the the above as well as security deposit amount (if applicable) and any/all additional fees (example: any taxes, license, and/or administrative fees). There must also be terms set (in writing) for any penalty charges or fees (late payment fees/default fees). Any and all warranties must be expressed, information must be supplied for product's maintenance and/or service. They must also disclose early termination rights and/or fees, as well as the customer's liability (if any) for the difference between the estimated value of the property and its value to the lessor at early termination or at the end of the lease.
This bill also limits penalties for delinquency, defaulting or early termination, to amounts which are reasonable depending on the anticipated or actual harm caused by the delinquency, default or early termination.
Restrictions on Garnishments
Parts of this act includes: Garnishments cannot exceed 25% of disposable income per work week and/or “the amount by which his disposable earnings for that week exceed thirty times the Federal minimum hourly wage prescribed by section 206 (a)(1) of title 29 in effect at the time the earnings are payable, whichever is less. In the case of earnings for any pay period other than a week, the Secretary of Labor shall by regulation prescribe a multiple of the Federal minimum hourly wage equivalent in effect to that set forth in paragraph (2).” However, there are several exceptions to the above within this act.
Employers cannot terminate an employee because of a garnishment, penalties for doing so include: “Whoever willfully violates subsection (a) of this section shall be fined not more than $1,000, or imprisoned not more than one year, or both.”
This act also sets the Secretary of Labor, “acting through the Wage and Hour Division of the Department of Labor” as the enforcer of the provisions within this subchapter.
Credit Repair Organizations
Parts of this act includes: No person (within credit repair company/organization) can counsel and/or advise consumer to make untrue or misleading statements- “(or which, upon the exercise of reasonable care, should be known by the credit repair organization...” Anyone within the credit repair company/organization cannot make false or misleading statements as well.
No credit repair company can charge a fee without first fully performing the service: “No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.”
This acts establishes liability damages for violations (actual damages, punitive damages, attorney fees) with various factors to consider. The act also establishes SOL for damages by a credit repair organization. This SOL is “the end of the 5-year period beginning on the date of the occurrence of the violation involved...” and/or “the end of the 5-year period beginning on the date of the discovery by the consumer of the misrepresentation.”
Guidelines for contracts, agreements, terms and conditions for the credit repair organization as well as the consumer's right to cancel (within 3 business days). “a conspicuous statement in bold face type, in immediate proximity to the space reserved for the consumer’s signature on the contract, which reads as follows: “You may cancel this contract without penalty or obligation at any time before midnight of the 3rd business day after the date on which you signed the contract. See the attached notice of cancellation form for an explanation of this right.”
Fair Credit Reporting Act
Parts of this act includes: Credit reporting agencies must: disclose to consumers the information and substance thereof within their report, they must investigate disputes and re-investigate disputes if requested, if re-investigation does not resolve the dispute, the credit reporting agencies must allow the consumer to post an explanation in their credit file. The credit reporting agencies must make corrections in the consumer report (if applicable), they must remove adverse or negative information within the consumer's report if more then 7 years old or 10 years for bankruptcies. Credit reporting agencies are only to furnish reports to those who have a permissible reason for it.
Creditors must notify consumers the name and address of any and all credit reporting agencies whose reports were used as a basis for the creditor's denial.
Equal Credit Opportunity Act
Parts of this act includes: Creditors/lenders cannot discriminate against credit applicants because of their race, sex, national origin, age, color, religion, and/or because their income comes from public assistance (example: disability and/or social security benefits). Lenders/creditors are permitted the use of gauges as a variable in a statistically sound, credit scoring system provided the age of an elderly (62 or over) applicant is not assigned a negative value and/or factor.
Lenders/creditors cannot refuse to consider income because it's from a retirement account, and/or part-time employment, and/or alimony/child support income. The lender/creditor cannot deny credit because a consumer exercised their right under the "Consumer Protection Act" (example: disputing a bill or disputing an error in their credit report).
If the applicant was denied: The lender/creditor must provide or inform the consumer of their right to request and receive the reason(s) for the denial and/or for any adverse actions taken because of the denial.
Electronic Fund Transfer Act
Part of this act includes: Sets consumer liability limits to $50 for unauthorized transfers involving a device/card if the financial institution is notified within 2 business days from the date the consumer realizes their card is lost or missing. The consumer liability is limited to $500, if the financial institution is notified more than 2 days after the card has been lost. The consumer liability is unlimited if the financial institution was not notified within 60 days after the consumer's receipt of a periodic statement.
Consumer is liable for billing errors if they fail to notify the financial institution within 60 days of receiving the statement with the error.
The financial institution has 45 calender days to resolve an error from the date the error was reported. In the event the error cannot be resolved within 10 business days, the account must be provisionally credited until the investigation is complete.
Lenders/creditors are prohibited from requiring electronic fund transfers to repay a loan as a condition to receive credit.
Consumers have the right to issue a stop payment for pre-authorized transfers.
Right To Financial Privacy Act
Customer must authorized access to the customer's records in a written statement as set forth in the act.
Financial records are disclosed in response to an administrative subpoena. The customer must be mailed a copy of the subpoena, customer has the right, within 10 days of receiving the notice, of filing a motion to prevent disclosure.
Financial records are disclosed in response to a search warrant.
Financial records are disclosed in response to a judicial subpoena. A copy of the subpoena must have been served on the customer on or before the date on which the financial institution was served.
In the absence of a subpoena, financial records are disclosed in response to a formal written request which must meet guidelines set forth in the act. A government agency may gain access to a consumer's financial records without notice to the consumer if the agency is investigating the financial institution, not the consumer.
Real Estate Settlement Procedures Act (RESPA)
Provide loan applicants with good faith estimates of all costs in relation to settlement services (costs for creating the real estate loan).
Must disclose when the lender refers settlement business to a company affiliated with the lender.
Provide loan applicants with disclosures regarding the possible transfer of the servicing of loans (both the lender and the new servicer must provide notices when servicing is transferred).
Provide disclosure of actual costs and charges for settlement services at the loan closing.
Not give any fee or kickback to any person for providing settlement services.
State By State Security Freeze
The 3 major credit reporting bureaus (Equifax, Experian, Transunion) have already enacted a policy allowing anyone (from any state) to request a freeze, temporarily lift a freeze and/or lift the freeze completely/permanently - some of these options do impose a fee. However, most states, but not all, have issued various laws, requirements and/or fees, some including free security freezes for ID theft victims. The typical requirement is proof you reported the possible identity theft to local, state or federal official(s)/agency.
State By State Statute of Limitations (SOL)
Statute of limitations (SOL) set for various agreements (open accounts, oral agreements, written agreements, etc...) broken down by state.
Credit CARD Act of 2009
Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 ~ Purpose: To amend the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes. Parts of this act includes:
Limits creditors on raising interest rates during the first year
Limits creditors on raising interest rates on existing balances
Mandates longer notice for future rate increases on purchases
Right to pay off balance on old terms
Limits are set on penalty interest rates, as well as fees
Regulates/Mandates reasonable time to pay by due date
Various rules for young consumers
Limits creditors on issuance fees on 'fee harvester cards'
Mandates clearer disclosures
Mandates/Regulates gift card protections
Things to take note of:
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