CFP Notes: Professional Conduct and Regulation - Consumer Protection Laws

FTC, Truth in Lending Act, Fair Credit Billing Act, and the Equal Credit Opportunity Act
The Federal Trade Commission is charged with enforcing statutes that relate to competition and consumer protection. The Truth in Lending Act is Title I of the Consumer Credit Protection Act; it requires all creditors to make specified disclosures regarding finance charges and related aspects of credit transactions. This includes stating finance charges in terms of an annual percentage rate. The Fair Credit Billing Act is an amendment to the Truth in Lending Act; it provides protection to borrowers whose credit cards have been lost or stolen, making it impossible for credit companies to adversely adjust their credit rating until an investigation is complete.

The Equal Credit Opportunity Act is Title VII of the Consumer Credit Protection Act; it states that creditors cannot discriminate against customers for any reason. Also, it states that creditors must give applicants written reasons when credit is denied.

Fair Debt Collection Practices Act

The Fair Debt Collections Act is Title VIII of the Consumer Credit Protection Act. This act forbids a debt collector from communicating with a consumer regarding the collection of a debt at the consumer’s place of employment. The act also defines the appropriate times for contacting a consumer: between eight in the morning and nine at night, at the consumer’s residence. According to the Fair Debt Collection Act, a debt collector cannot communicate with any person other than the consumer, his or her attorney, and a consumer-reporting agency. Finally, this act states that if a consumer should notify the debt collector that he or she either does not intend to repay a debt or no longer wishes to hear from the debt collector, the debt collector is required to cease communications except to declare what consequential actions the debt collection agency or creditor will take.

Fair Credit Reporting Act

The Fair Credit Reporting Act asserts that consumers have the right to see their own files and request that corrections be made. The act also states that the information contained in a consumer report cannot be provided unless the recipient has a purpose specified in the act. Also, the government is not allowed to see a file unless it is considering hiring the individual, granting some kind of license, considering whether to give the person a security clearance, or if back taxes are owed.

Furthermore, the Internal Revenue Service must have a legitimate case in order to receive a report. The act also specifies lengths of time after which information becomes obsolete. Adverse information becomes obsolete after seven years, and bankruptcy information becomes obsolete after ten years.