Consumer Rights and Credits

 There are some of the most important consumer rights every borrow must know. It will prevent you from getting into debt or other problems connected with borrowing money. We outline and explain the laws to help you avoid scams and frauds.

Contents:

Basic consumer rights to safety, information, rights to choose and to be heard. 

Right to Financial Privacy Act.

Credit Practice Rule.

Expedited Funds Availability Act. 

More Consumer Credit Acts. 

Basic consumer rights to safety, information, rights to choose and to be heard. 

For the first time consumer rights were really applied only in 1960’s, when the government truly decided to support consumers.

The history of official documents related to consumer rights begins in 1968, when Consumer Credit Protection Act¹ was adopted. Next years there were other laws which regulate consumer’s relations with banks and vice versa. The topic came to its climax during Great Recession, when in 2008 a new institution, Consumer Financial Protection Bureau² was created to protect consumers.

Nowadays we have got many different kinds of laws called to protect consumer rights. But despite this great number of acts, any person has to know the basics.

Main rights can divide all the rules into 4 main groups. They are:

• Right to Information. It includes the understanding that producers should provide consumers with true information, which they get from advertising, for example. It becomes especially important when we speak about health care products.
• Right to Choose. It includes laws concerning unfair competition and antimonopoly laws.
• Right to Safety. It is dedicated to safety. All products should be tested, meet standards and have special warning labels. It regulates by Consumer Protection Safety Commission.
• Right to be Heard. Each consumer has a right to complain to the government and to get the answer. There are special institutions like Consumer Financial Protection Bureau, Federal Trade Commission, Better Business Bureau or the U.S. Attorney General.

Right to Financial Privacy Act. 

The main goal is to limit government’s accessibility to private financial records. According to this Act, government representative should have an official written permission in order to get access to financial records. Before the procedure the officials should send to the account holder a special notification and get the response prom the holder during 10 day’s term, or 14 days from the day when notification was made³. This law doesn’t relate to local governments or private businesses, it only concerns federal government and its departments.

The law contains information about kinds of institutions it rules. It covers not only current accounts in banks, but also records saved by merchant credit-issuing entities. It means, that credit card accounts in the store or at the gas station will be regulated by this legislation.

The act was changed in 2002. New institutions were added to the content of the law, but some of them can’t be considered as financial. They are:

• Postal Service,
• card clubs and casinos,
• traveler’s check issuers,
• trading advisors,
• thrifts,
• futures and securities brokerages,
• credit unions,
• money-order issuers,
• money-services businesses.

For five of fewer person groups or individuals there are limitations in law’s protections. Big communities like trade unions or trade associations are not included. There are exceptions:

• When there are special conditions, you may be not informed or asked that your files are checked by agencies.
• If a financial institution excludes all personal information, it also may issue your records.
• If there are illegal actions with accounts, a financial institution can notify the police about it.
• When a bank wants to collect a debt or to solve the dispute with bankruptcy, financial records copies can be sent to the court.

Credit Practice Rule.

The law was accepted by the Federal Reserve Board in 1985. It was created in order to protect consumer rights in debt. It concerns the credit contracts with creditors like stores, companies or car dealers. But it doesn’t cover bank loans or real estate purchases. The law forbids banks and its subsidiaries to put some provisions (listed below) in contracts with consumers:

• Such provisions which make a consumer to refuse legal protection of his house, salary or possessions against seizure to satisfy a court decision. It is permitted when property acts as a pledge in the credit.
• Any provision which violates borrower’s notification about court hearing or relinquishes borrower’s right to be heard in the hearing in case if a claim is made alleging a debt default.
• Any phrase, with the help of which banks can take the future consumer’s salary or earnings in order to cover the credit. Some banks can propose you to deduct money automatically from your wages, if you have debt for example. But creditors can make you such offer only when they give you an ability to cancel these payments at any time.
• Clauses which include pyramiding late fees. In case you make payments at right time, but don’t include the owned late fee, the additional late fee can’t be taken by creditor.
• Provisions, where creditor can take households goods of the borrower in order to pay a debt. This restriction is spread only on things not purchased with credit line of the bank.

The lender also should provide cosigners with information and explanation about debt consequences. This notification should be represented before the issuance of the credit line or loan as a separate paper or in a credit obligation. This information should be found in this notification:

• Cosigners take responsibility for the whole amount with penalties (collection fees and late fees). They also should pay the debt if the borrow can’t do it. They have to be sure, that they are able to pay.
• In dependence on the state, before taking payments from the first borrower, creditor has a right to take it from cosigners.
• When the debt comes to default, it can appear on credit reports of cosigners.

Expedited Funds Availability Act. 

This document contains information about the time you should wait before withdraw money after putting it into bank account. This Act was adopted in 1987 and changed in 2010. These changes define when certain amounts are opened for an account owner.

On the next business day governmental checks must be available day as well as cash deposits and transfers. The same with cashier’s, teller’s and certified checks.

Thus, if a deposit was made on Monday, a person can take it on Tuesday. If it was made on weekends, the amount will be available on Tuesday.

When on a single business day, the total checks amount is up to $100, it will be accessible on the next business day. In cases when the amount is more than $100, waiting time can grow.

There are some rules:

• Non-local and local checks – 5 business days for non-local and 2 days for local after deposit was made.
• 1 extra day for deposits from Puerto Rico, the Virgin Islands, Alaska, another state or country financial institution.
• Other terms are for deposits made at ATMs that are in possession of other banks.
• Waiting process can take even more time when there are new accounts of $5.000 or more, checks re-deposited after unpaid returning, checks for more than $5.000.
• This Act also describes cases, when banks have a right to place a hold on a deposit.
• Newly created account. If 30 days don’t pass since your account was opened, there can be a 9 days of hold on deposits.
• Statutory. After deposit was made, first $200 should be available in bank on the next business day, on the second day - $600, on the third day – the rest of amount.
• Large deposit. Banks need more time when deposits are more than $5.000. On the first and the second business days, situation is like in Statutory case, but on the third day $4.800 should be available. The rest of the amount should be available during 7 days after deposit was made.
• Exception. This applied in unusual situations (the fall of computer system, illegal checks or if there are overdrawn accounts.

A client has a right to sue a bank, when it doesn’t follow the rules. There is 1 year of limitation period, then a bank can’t be liable for its real mistake. Liability can’t be more than the amount of the check that led to a loss. In different cases, other kinds of damage can be applied.

More Consumer Credit Acts. 

As it was said, many legal acts were developed to protect the rights of consumers. Here are the most important:

• Equal Credit Opportunity Act. Any credit-worthy applicant (independently of race, origin, sex, color, religion, getting public assistance, age) has a right to get a credit in banks or credit card companies.
• Fair Debt Collection Practices Act. It is forbidden for debt collection companies to threat, to harass or wrongfully contact with a debtor.
• Fair and Accurate Credit Transactions Act. According to this law consumer has a right to get every year a report from three main credit reporting agencies.
• The Credit Repair Organizations Act. Organizations that make credit reports repair, should do it in a proper way. They should provide honest service and the information they send to credit bureaus should be truthful.
• Consumer Credit Protection Act. This Act concerns credit reports and different aspects of credits and debts. Credit companies and banks are regulated in order to ensure that they provide honest and truthful practices.
• The Electronic Funds Transfer Act. According to this law, transactions with the help of new technologies should be protected the same way as tradition means of purchasing.
• The Credit Card Act. Often called the Credit Card Bill of Rights. According to it, fair interest rates, fees and penalties should be set by credit card agencies.
• Truth in Lending Act. A client has a right to get a real cost of the credit and get information about terms and conditions in an understandable way.
• Fair Credit Reporting Act. Credit reporting agencies, which gain and distribute information, should monitor the quality of this data.
• The Fair Credit Billing Act. When there are cases of disputes over billing statements, mistakes with amounts or dates, unauthorized transactions and other questions, recommendations for such problems resolution can be found in this Act.

Here listed the most popular laws relating to consumer rights. More information can be found on Federal Trade Commission⁴ web-site.