Five Laws Every Consumer Should Know

Five Laws Every Consumer Should Know

With 1.3 billion credit cards in the United States, credit problems are bound to come up. If you find yourself in a credit dispute, the key is to be persistent. Solving credit problems can take a lot of time and effort. By educating yourself about your legal rights, you can ensure that you are treated fairly. To help you protect your valuable credit history, the Federal Trade Commission (FTC) enforces five crucial laws.

• The Fair Credit Reporting Act (FCRA). According to Consumer Reports magazine, an estimated 48% of consumers have errors on their credit report. If you are among them, the FCRA can help. The FCRA was passed by Congress in 1970 and protects consumers by requiring credit bureaus to furnish correct and complete information to companies requesting credit histories for evaluation.
  
  Among other important provisions, the Act ensures that consumers have access to their own credit histories. For example, if you are ever denied credit because of your credit history, you have the right to obtain a free copy of your report. It also requires any disputed item on your credit report to be investigated and removed if appropriate. The dispute process is simple and the dispute form is often included with your report or can be obtained online. If you file a dispute, be sure to keep copies of your dispute form and any supporting documents for your files.
• The Equal Credit Opportunity Act (ECOA). By law, all consumers have an equal opportunity to be granted credit. Creditors may not discriminate on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. The Act does not prevent creditors from asking for this information (except religion) in certain situations, however they may not use it to discriminate when deciding whether to grant you credit. In addition to this protection, there are also several laws that prohibit discrimination based on disability. If you are ever denied credit, this Act also requires that creditors explain the reason. The Act further states that a consumer should not be directed to obtain a cosigner when an individual's income is sufficient for loan approval.
• The Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA). These Acts can help consumers resolve mistakes on credit billing and electronic fund transfer account statements. The Acts outline procedures for correcting several types of errors including unauthorized charges and the failure to properly reflect payments.
  
  Consumers should be aware that there are some limitations to the Acts. The FCBA only applies to open-ended accounts, such as credit cards. It also requires some action by the consumer. For example, while a creditor is required to deliver statements to your current address, the consumer must have notified the creditor, in writing, of any address change at least 20 days prior to the end of the billing cycle.
• The Fair Debt Collection Practices Act (FDCPA). In 2002, the FTC received more than 50,000 complaints about third-party and in-house collectors. If you feel that a creditor has engaged in unfair, deceptive, or abusive practices while collecting a debt, the FDCPA provides protection. However, what actually constitutes harassment would be up to the courts to decide, if you chose to sue a creditor for harassment. Some courts might feel what a creditor/collector has done is harassment while another court would consider those collection tactics a routine collection practice. State collection laws vary quite a bit, but the FDCPA does outline some hard and fast rules.
  
  For example, debt collectors may not:
• contact you before 8 a.m. or after 9 p.m.
• contact you at work if they know your employer disapproves.
• harass, oppress, or abuse you.
• lie when collecting debts, such as falsely implying that you have committed a crime.

If you are unsure whether being familiar with these laws is worth the effort, the answer is “yes,” particularly if your credit report is adversely affected by a credit problem. Creditors make lending decisions by calculating the information in your report into a credit score. According to myFICO.com, a person with the score 674 could obtain a 30-year fixed mortgage interest rate of 7.47%, while a person with only one point higher (675) would qualify for a substantially less 6.32%.

The full-text versions of these laws can be found at www.ftc.gov. If you feel a violation of any of these laws may have taken place, you may need to contact an attorney. Also, file a report with the Federal Trade Commission, Washington, DC 20580. While they cannot act as legal counsel in private disputes, your information may be vital to the enforcement of these important consumer laws.