Credit Laws arise under both state and federal regulations governing interest, finance charges, cash advances, charges for extensions of credit in excess of pre-established limits, late fees or delinquency charges, premiums on credit life and credit accident and health insurance, annual fees and other charges and fees, and many others. If a business grants credit to customers, it must comply with federal laws affecting credit sales to consumers, as well as state laws in whichever jurisdiction it is operating. Federal credit laws include the Truth in Lending Act (TILA), the Fair Credit Billing Act (FCBA), the Equal Credit Opportunity Act, the Fair Credit Reporting Act (FCRA), and the Fair Debt Collection Practices Act (FDCPA).
The Truth in Lending Act
This Act helps customers know what they are agreeing to in a credit transaction. It requires businesses to disclose their exact credit terms and regulates how credit providers can advertise. Required disclosures include monthly finance charges, annual interest rates, payment due dates, total sale prices, and how late charges are assessed and how much they are.
The Fair Credit Billing Act
This federal law governs billing errors on credit accounts. The customer must notify the credit provider within 60 days of an incorrect charge, and the credit company must respond within 30 days. The creditor must conduct a reasonable investigation and, within 90 days of getting the customer's letter, explain why the bill is accurate or correct the error. Failure of a creditor to comply will result in a $50 credit toward the disputed amount, even if the bill was correct, and the creditor cannot report the disputed amount to credit agencies until the disagreement is resolved.
The Equal Credit Opportunity Act
Credit companies may not discriminate against an applicant on the basis of race, color, religion, national origin, age, sex, or marital status. The only justifiable bases for declining to extend credit are things like the applicant's financial status (earnings and savings) and credit record. Although there is a prohibition against age discrimination, a credit company can reject a consumer who is underage.
The Fair Credit Reporting Act
This is the federal law primarily related to credit reporting agencies. It protects consumers from haiving their eligibility for credit disrupted as a result of incomplete or misleading information contained in one's credit report. The law gives consumers the right to receive a copy of their credit reports and challenge inaccurate information contained in it. If the business reporting inaccurate information does not change or delete the inaccurate information after being alerted to the inaccuracy, the consumer can add a 100-word statement to the file explaining his or her side of the story.
The Fair Debt Collection Practices Act
This federal law addresses abusive methods used by third-party debt collectors. This act can create liability for harassing or abusive practices, like speaking to people other than the debtor about the obligation, repeatedly calling, trying to collect amounts not due, intentionally reporting inaccurate amounts to credit reporting agencies, and so forth.
Know Your Rights!
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