How Credit Law Protects Consumers

Consumer credit laws were designed to provide protection in a variety of ways that affect consumers fair access to credit. This can refer to the consumer’s right to understand the credit and loan terms prior to agreeing to them, every consumer’s fair and equal access to credit, limitations on loan and credit interest and terms, and so on. Even a basic understanding of these important laws and Acts can help individuals understand their rights.

Understanding consumer credit rights is the first step to ensuring that you’re being treated fairly by creditors. These credit laws also provide consumers with avenues to have their concerns addressed. The Federal Trade Commission, for example, is charged with overseeing some of these consumer credit laws.

Outlined below are several laws of particular importance for consumers. In today’s economic climate, many consumers are particularly concerned with repairing bad credit reports and scores, and for this reason, the laws of particular importance to those individuals interested in credit repair efforts are placed in their own category.

Consumer Credit Laws

Laws of special importance to credit repair services and a general overview are provided below.

The Credit Repair Organizations Act was designed to ensure that those seeking credit repair services from credit repair organizations are provided with the information necessary to make an informed decision. It aims to ensure that consumers are protected from deceptive or unfair advertising and unscrupulous business practices.

Examples of unscrupulous practices include suggestions that a consumer change their identity or that a consumer lie about their past credit history to potential creditors.

Credit Repair Organizations that violate the law can be sued for damages and attorney’s fees. Violations of the Act can be reported to the Federal Trade Commission and/or your local state attorney general. A consumer has 5 years to take action against an organization once they have learned of a violation to the Act.

The Equal Credit Opportunity Act prohibits the denial of credit because of sex, marital status, race, religion, national origin, age or because a person receives public assistance. This law offers protections to consumers when they deal with any people or organizations who participates in the decision to grant credit or in setting the terms of that credit. This includes banks, credit unions, credit card companies, loan and finance companies, retail stores, and real estate brokers.

The law ensures that consumers have the right to know whether their applications for credit were accepted or rejected within 30 days of filing a complete application and to know the reasons why an application was rejected. It also protects the rights of consumers to know the reason(s) why they have been offered less favorable terms than requested, but only if that consumer rejects the less favorable terms being offered.

A number of federal agencies are charged with the enforcement of the Equal Credit Opportunity Act, including Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, to name a few. Where a consumer directs complaints depends on the complaint itself. A starting point for consumers is to visit the Federal Reserve website or call 1-888-851-1920.

The Fair Credit Reporting Act (FCRA) gives any individual the right to know what information is being distributed about them by any credit reporting agency. It regulates the collection, dissemination, and use of consumer credit information. The FCRA was passed in 1970, and along with the Fair Debt Collection Practices Act (FDCPA), it constitutes the core of credit law in the US.

Critical to the Fair Credit Reporting Act are the rules and responsibilities outlined that Credit Reporting Agencies must follow. Credit Reporting Agencies (CRAs) are the entities that collect and store credit information on every US consumer. The FCRA also provides regulations that those who provide the CRAs with information must follow. Examples of these information furnishers are creditors such as credit card companies, mortgage companies, and automobile financing companies. Other information furnishers include employers, bonders, and courts that enact judgments against individuals, such as bankruptcies.

The Fair Credit Reporting Act is enforced by the Federal Trade Commission. The FCRA is arguably the most powerful piece of legislation used by credit repair companies who seek to have out of date and/or incorrect information removed from a consumer’s credit report.

Notices of Rights and Duties under the FCRA (July 1, 1997) were published by the Federal Trade Commission as amendments for the Fair Credit Reporting Act. The Notices must be distributed by Credit Reporting Agencies and include a summary of consumer rights under the FCRA; a notice that sets forth the responsibilities under the FCRA of those who furnish consumer information to consumer reporting agencies; and a notice that outlines the obligations for any person who uses information covered by the FCRA.

These Notices were designed to enhance the Fair Credit Reporting Act in an effort to promote accuracy, fairness, and the privacy of information in the credit files created by all credit reporting agencies.

The Federal Trade Commission oversees the proper implementation of the FCRA and the Notices of Rights and Duties.

The Truth in Lending Act (TILA) is a US federal law that was enacted in 1968 and is contained in Title I of the Consumer Credit Protection Act. It’s intent is to protect consumers by requiring that any lender, prior to entering into a credit transaction, provide written disclosures of the costs of credit and the terms of repayment.

Excluding some high-cost mortgage loans, the TILA doesn’t regulate the charges that may be established for consumer credit. What the Act requires is standardized disclosure of costs and charges for credit. This protects consumers by helping them shop and compare the costs and terms of credit and make informed decisions about where and from whom they access credit.

Other benefits to consumers include the right to cancel particular credit transactions that involve a lien on a person’s primary dwelling and the regulation of credit card practices. It also includes mechanisms to protect a consumer’s timely resolution of credit billing disputes.

The Truth in Lending Act is enforced by the Federal Reserve System, the Federal Deposit Insurance Corporation, and several other agencies. Those creditors that are not under the jurisdiction of any specific enforcement agency answer to the Federal Trade Commission.

Other Consumer Credit Rules and Acts

The Consumer Leasing Act is a federal law that requires leasing companies to inform a consumer in writing about the details involved in a contract. It outlines requirements regarding the cost and terms of any leasing agreement, including a statement of the number of lease payments and their dollar value, penalties for reneging on timely lease repayment, and whether a lump sum payment is due at the end of the lease agreement.

This Act helps consumers understand the important details of any lease agreement so that they can shop for the best leasing terms. It also helps a consumer compare the cost of leasing with actual purchase costs. In addition, it regulates lease advertising by penalizing unscrupulous or unfair advertising practices.

The Act applies to leases including personal property leased by an individual for the period of more than four months for personal or household use, long term rentals of items such as cars and appliances, and other personal property.

The Consumer Leasing Act is enforced by the Federal Trade Commission.

The Fair Credit Billing Act (FCBA) is a US federal law that was set forth as an amendment to the Truth in Lending Act. The Act outlines guidelines and procedures for resolving billing errors that may appear on credit card and charge card accounts, and protects consumers from unfair billing practices.

The procedures outlined in the FCBA include the proper dispute process for consumers. Consumers may send via mail a written dispute of perceived billing errors to their creditor within sixty days of the statement date on the account statement. The creditor is obliged to acknowledge and investigate the dispute, and within 90 days, make the requested correction or inform the consumer in writing that no correction with be made the reasons why.

Examples of billing errors covered by the Act include: charges not made by the consumer; incorrect charge amounts; charges for goods not received by the consumer; charges for goods not delivered under specified terms; charges for damaged goods; failure to update account payments made; calculation errors; charges a consumer either requests proof of or wants clarified; and payments mailed to the wrong address.

Overall enforcement of the Fair Credit Billing Act is the responsibility of the Federal Trade Commission; however, enforcement for banks falls under the domain of the Federal Deposit Insurance Act.

The Fair Debt Collection Practices Act (FDCPA) sets out guidelines and procedures for collections companies that prevents debt collectors from using unfair or deceptive practices to collect overdue bills. Debt collectors regulated under this Act include collection agencies, lawyers who regularly collect debts, and companies that buy delinquent debts from others and endeavor to collect them.

The debts covered under the Act do not include debts incurred by businesses. They do include family, and household debts, such as money owed on credit card accounts, medical bills, auto loans, and mortgages.

The Federal Trade Commission (FTC) is charged with the enforcement of the Fair Debt Collection Practices Act.

The Home Ownership and Equity Protection Act (HOEPA) is an amendement to the Truth in Lending Act and was implemented by the Federal Reserve System in 1994. It was designed to protect consumers by restricting certain terms of high cost home loans in situations where the interest rate or fees are above specified levels.

This Act applies to the sub-prime mortgage market and home equity lending, and it has therefore been discussed at great length in recent times.

The Home Ownership and Equity Protection Act applies primarily to refinancing and home equity installment loans, provided that these loans meet certain criteria and fall under the definition of a high fee or high rate loan. The Act does not apply to reverse mortgages, loans to build or buy a home, or home equity lines of credit.

As with the Truth in Lending Act, enforcement of HOEPA falls under the jurisdiction of the Federal Trade Commission.

Credit law exists to protect consumers. The Fair Credit Reporting Act and the Credit Repair Organizations Act are of particular importance to those who provide credit repair services and those seeking to repair bad credit reports on their own. Understanding these laws and where and how they are applied and enforced is critical for any consumer interested in protecting their rights in any credit or leasing arrangement.

New CDC Report On Seat Belts

Seat belt laws were created fairly recently in the United States, and their implementation has varied across states and vehicles-the consequences of which have proven detrimental on numerous occasions. One night last fall, a father and his daughter were traveling down a San Diego highway when he suddenly lost control of the vehicle and swerved into oncoming traffic. His daughter was ejected and died at the scene of the accident. The vehicle, a 1956 Volkswagen Beetle, had never been outfitted with safety belts, nor was the father ever required by law to install any. Given the strong relationship between occupant protection and the use of safety belts his daughter may have survived the accident had she been wearing one.

An estimated 12,713 lives were saved by seat belts in 2009. Moreover, more than 72,000 fatalities were prevented between the years of 2005 and 2009, according to the National Highway Traffic Safety Administration (NHTSA). In California, 574 of the 1,963 vehicle occupants killed in motor vehicle collisions in 2008 were not wearing any safety equipment, according to the California Highway Patrol’s accident statistics. As much as drivers who “buckle up” have improved the safety of motor vehicles, there were no laws mandating their use until New York enacted the first one in 1984. In the following years, every other state would follow, except for one: New Hampshire.

Seat belt laws fall into two categories: primary and secondary. In states where primary laws are in effect, law enforcement officials may stop a vehicle and issue a citation when either a driver or a passenger is not wearing a belt. An officer may only issue a citation for not wearing a safety belt after the vehicle has been pulled over for another violation in states with secondary laws. “Currently, 31 states, including California, the District of Columbia, and Puerto Rico have primary seat belt laws, and 18 states have secondary laws”, explains Jim Ballidis, a California personal injury lawyer.

Compliance has been higher in states with primary laws than in those with secondary laws, according to NHTSA. A recent telephone survey by the Centers for Disease Control and Prevention confirmed NHTSA’s finding: drivers in California, Oregon, and Washington-all states with primary laws-reported the highest seat-belt use in the country. Coming in first place was Oregon, where 94% of the people surveyed claimed to be seat-belt wearers, followed by California with 93.2%, and Washington State with 92%. Surprisingly, New Hampshire did not rank the lowest. Whereas 66.4% of people surveyed there said they always use a safety belt, only 59.2% of people in North Dakota reported the same.

As seat-belt use has increased, the number of vehicle occupant fatalities has decreased, according to the National Occupant Protection Use Survey (NOPUS). The recent CDC study noted a similar correlation between seat-belt use and injuries resulting from accidents: between 2001 and 2009, the injury rate among motor vehicle occupants decreased by 16%, while between 2002 and 2008, the number of people using buckling up rose from 81% to 85%.

Motor vehicle accidents are the leading cause of death for people between the ages of 5-34 in the United States. Safety belts have the potential to reduce the risk of fatal injuries during a crash by approximately 45%, according to the CDC. Considering these two facts, everyone should buckle up.

Health Care Reform: The Employer Mandate and Reporting Requirements

Many employers remain confused about health care reform, and how their business will be impacted. One of the most important parts of the law is the employer’s “shared responsibility” role, in which employers are required to provide affordable health insurance coverage to their staff. However, “this pay-or-play” mandate has been postponed, providing employers more time to understand and comply with the law.

Reporting Requirements

Employers and other reporting entities will be provided additional time to provide input and feedback on ways to simplify information reporting, while remaining consistent with the law. Known as “transition relief”, it is intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting systems.

In anticipation of the application of the provisions in 2015, however, the IRS encourages employers to voluntarily comply for 2014 with these information-reporting provisions (once the information reporting rules have been issued) and to maintain or expand health coverage to all full-time employees in 2014.

Employer Mandate (employers defined as “large” by the ACA)

No “Employer Shared Responsibility” penalties will be assessed for 2014 (the piece of the law requiring employers to provide all employees with affordable coverage). Large employers who do not offer coverage or who offer coverage that does not meet the ACA’s definition of affordable will not be penalized in 2014. However, these employers need to be ready to comply for 2015.

Individual Mandate

The individual requirement, which is effective January, 1, 2014, has not been delayed. Under the individual requirement, U.S. citizens and legal residents are required to carry health insurance or pay a penalty tax. It is expected that the set-up and operation of the new insurance marketplace, called “The Exchange,” will continue in each state.

Premium Credits through the Exchange

The delay does not affect the availability of premium credits for individuals eligible for federal subsidies. Individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchanges (also called Health Insurance Marketplaces), if:

a) Their household income is within a specified range; and,

b) They are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value.

Benefits eligibility for full-time employees/Hours Tracking

The ACA defines a full-time employee, for the purpose of benefits eligibility, to be one working an average of 30+ hours per week. Due to the delay of the employer mandate, employers will not be required to comply with this definition in 2014. There is no need for employers to track hours in 2013 to determine eligibility for 2014, or to decide on a measurement, administrative, and stability period.

Maximum waiting period

The delay does not affect the maximum waiting period rules effective January 1, 2014. The ACA requires that an employer must not have a waiting period that is longer than 90 days. Note that some states, such as California, may have more stringent laws.

Although the two items being delayed are significant, we recommend that employers continue their diligence with understanding and preparing for the implementation of Health Care Reform provisions in 2014, through 2020.