Consumer Credit Protection Laws

Learn about the laws that are put in place to protect your rights as a consumer.

Fair Credit Reporting Act

“This law provides the rules for accessing, as well as correcting credit reports.”

This is also known as FCRA and it’s the granddaddy of consumer credit protection law. This is a federal law that controls how information about your credit is gathered, shared and used. The law is administered by the Federal Trade Commission. The first part of FCRA forces these credit bureaus to provide you with one free credit report annually and to verify the accuracy of any item you report as an error to them. That last bit is the important part. If an item is inaccurate, the bureau must remove it. If they later discover that the error has been corrected they can’t put the negative item back in your report. But if they do that they first should tell you 5 days before they reinstate the item. Next, the Fair Credit Reporting Act mandates how long the CRA can keep negative items on your report. Typically, most blemishes should come off your credit report in 7 years. The exception is bankruptcy which stays on your record for 10 years. FCRA also spells out the rules of conduct for anyone reporting to the credit reporting agencies. That includes creditors, collection agencies, courts and employers (past and present). These people can only report information that is complete and accurate. And they must investigate any item that you dispute. If they find a mistake, they must fix it within 30 days. If they still believe their report is accurate, they must tell you why within 30 days. Last, they are obligated to let you know when they report a negative item to a credit bureau but they have 30 days from the time they report the negative to let you know about it. (According to Credit Pilgrim)

Fair Credit Billing Act

This is also a federal law and its really part of the Truth in Lending Act. The goal here is to safeguard you against unfair billing and to lay out the way errors are supposed to be corrected. You can use this law to get satisfaction from unfair business practices such as: • You are charged for something you didn’t buy.

• The amount you are charged is wrong.

• You never received the items, you received the wrong items, they weren’t delivered as agreed or were damaged when you got them.

• You don’t get credit for your payments.

• Statements are sent to the wrong address.

This law gives you as the consumer a lot of fire power but you should play by the rules. First, if you find a mistake, send a snail-mail letter to the “billing inquires” address of the creditor – not the address you send payments to. Once the error appears on your statement, you must make sure the creditor gets your dispute letter within sixty days of the statement date. For these reasons, I suggest you use an overnight mail delivery service or registered mail. The creditor then should acknowledge they received your letter within 30 days and they have 90 days to either make the correction or tell you why they aren’t going to. If you get turned down, you have the right to request all the creditor’s documentation proving there is no error. (According to Credit Pilgrim)

Fair Debt Collection Practices Act

“This act creates the guidelines in which debt colletors should conduct business.”

As the name implies, this law protects consumers (not business) from debt collectors’ nasty behavior. It also provides a way for you to get your hands on the information you need to dispute a charge. The law stops debt collectors from engaging in “abusive and deceptive” behavior when they try to collect debt. That includes:

• Contacting you after you’ve requested a validation of the debt.

• Calling you when the collector knows you are working with an attorney.

• Calling you after 9 pm or before 8 am local time.

• Contacting you at work if your employer prohibits it.

• Non-stop calling just to be a nuisance.

• Reporting or threatening to report false information to credit bureaus.

• Publicly embarrassing you – that includes sending you a “debt postcard” or putting an embarrassing stamp on note on a letter they send you. It also includes publishing your name on a “bad debt” list.

• Talking with people other than your spouse or attorney about the collection.

• Using abusive language, threatening to have you arrested or other legal action they can’t legally take.

• Trying to collect higher amounts than are owed.

• Misrepresenting themselves such as saying they are police or attorneys when they are not.

• And the granddaddy of them all – the debt collector must stop contact with you after they receive your written notice demanding that they stop contacting you or that you refuse to pay the bill. The only exceptions are they can contact you to tell you that they are no longer going to pursue the matter and they can contact you to tell you they are going to start litigation against you. (According to Credit Pilgrim)

Truth in Lending Act

Also another federal law, the Truth in Lending Act (TILA) is also known as the Consumer Credit Protection Act or “Regulation Z”. It covers disclosures about terms and costs. It also makes sure that there is uniformity in how creditors calculate finance charges. This enables you to shop for the lowest rate. But this law does not determine how much a creditor can charge. The only mandates that they disclose their charges in a way you can easily understand without getting an economics degree. Have you ever seen the term “Annual Percentage Rate” (APR)? Based on this law, the government forces creditors to calculate APR uniformly and disclose it to you. The government passed this law to stop vendors from advertising misleading interest rates. (According to Credit Pilgrim). If you are unable to resolve errors on your credit reports with either the credit reporting agency or creditor, (data furnishers) it is your right to file a complaint with the Fair-Trade Commission, the Better Business Bureau, the State or Federal Attorney General, and many more consumer advocacy groups.

As a consumer, you have these four laws in place to protect you. By understanding all of them, that gives you an advancement of knowing what is being done correctly as well as incorrectly when it comes to your credit reports. When stating the facts of these laws as disputing the negative information on your credit reports, you are showing the bureau representatives that they won’t be able to get over on you. It is a known fact that credit bureaus do not always correct the mistakes of your credit report, that is why it is your job to frequently check and stay familiar with all contents. There are multiple well-known trusted sites that offered daily monitoring for a monthly cost and sometimes even free.