Consumer Credit Laws
By Tiffany Sorensen
Over the decades, the U.S. government has passed various laws aimed at protecting credit consumers. These laws cover procedures such as credit reporting, debt collection practices, credit billing, and more. Below are summaries of some of the main consumer credit laws.
The Fair Credit Reporting Act (1970)
Under the Fair Credit Reporting Act, you have a right to know what information is in your file. You can find this out by requesting a credit report from a recognized credit-reporting agency. You also have a right to know if the information in your file has been used against you—for example, if it leads to your being denied employment. By law, the individual or company that uses information in your disfavor must alert you and indicate which agency provided that information. Furthermore, you may dispute information in your file that is incorrect, incomplete, or unverifiable. In response, credit-reporting agencies must amend your file within a certain time period.
The Fair Credit Reporting Act seeks to ensure your privacy is respected. Credit-reporting agencies are prohibited from handing out your information without your consent. Similarly, agencies may only distribute your information to those who require it; this usually includes creditors, insurers, current and potential employers, and landlords.
The Fair Debt Collection Practices Act (1977)
This law prohibits debt collectors from engaging in certain behaviors that are considered immoral or invasive. For example, debt collectors should not call a debtor’s home between 9 PM and 8 AM local time or call many times over in order to aggravate the debtor. In addition, debt collectors may not lie about the details of a debt, use profane language, place a debtor’s name on a “blacklist”, or continue communication when a debtor has requested otherwise. These are just a few examples of illegal debt collection practices.
If a debt collector violates any of the provisions set forth in the Fair Debt Collection Practices Act, he/she may have to pay the debtor a fine of up to $1,000. However, consumers should be aware that these rules only apply to debt collection companies, not the original creditor.
The Fair Credit Billing Act (1979)
According to the Fair Credit Billing Act, consumers may dispute any billing mistakes they discover, such as incorrect charge amounts, fraudulent charges, or charges for items the consumer didn’t receive. In most cases, the consumer’s dispute must be made in writing and sent to the department in charge of billing inquiries.
Credit card companies are required to acknowledge receipt of the dispute and investigate it in good faith. By law, credit card companies have 90 days to correct any genuine mistakes reported by a consumer. However, if the credit card company believes there is no mistake, it must notify the consumer and state the reasons why it reached that conclusion. The consumer, in response, may ask to see documentation that supports the company’s finding.
The Fair & Accurate Credit Transactions Act (2003)
Under this law, consumers can request and review one credit report per year from each of the three major credit-reporting agencies: Equifax, Experian, and Transunion. You can access your free credit reports by logging onto www.annualcreditreport.com. You will then be prompted to enter personal information and answer security questions to verify your identity. Consumers should note that www.annualcreditreport.com is the only website authorized by the government for these purposes.
The Fair & Accurate Credit Transactions Act also has provisions that are meant to prevent identity theft. For example, you may place a fraud alert if you believe you’ve been a victim of identity theft. The credit-reporting agencies are then required to notify one another of the fraud alert. Fraud alerts make it more difficult for an identity thief to open a fraudulent account in your name.
It’s exceedingly helpful to be a wise, informed credit consumer. When you’re familiar with the laws that govern this sector, you’re more likely know if your rights are being violated. Further your consumer education today!