As a consumer, you have rights that are protected by law. Consumer credit laws regulate creditors and the three major credit reporting agencies and are designed to protect you. For example, they protect you from discrimination by companies that give credit and require creditors to give reasons for not doing business with you. If you feel you have not been treated fairly or have been discriminated against, consumer credit laws will be important to you.
Below is a summary of some of the key consumer protection laws that you should understand so that you are treated fairly and within the law.
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act protects consumer rights throughout the loan process. Lenders cannot discourage you from applying for a loan based on certain characteristics you may have. The ECOA makes sure that credit is available to all applicants who qualify for credit, without regard to the following factors: race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income. You also cannot be denied credit if you exercise your rights under the Consumer Credit Protection Act (for example, you cannot be denied a loan because you have filed a complaint against the bank). ECOA also restricts the lender from requesting certain information during the loan application process.
Fair Credit Billing Act
The Fair Credit Billing Act requires creditors to promptly credit payments and correct billing mistakes for open-ended accounts such as credit cards. It also allows you to withhold payments on defective goods. Examples of billing errors include a charge for something you did not buy, a charge that is different from the actual purchase price, or an error in math (for example, the total does not add up, or there is an error in the amount of interest added).
If you think there is an error on your bill you should notify your creditor in writing within 60 days of receipt of the incorrect bill. Include your name, account number, and what you believe is the error. Keep a copy of the letter.
Fair Debt Collection Practices Act (FDCPA)
The Fair Debt Collection Practices Act requires that debt collectors treat you fairly and bans unfair, deceptive, or abusive debt collection practices. This law applies to personal and household debts including: money owed for the purchase of a car, medical care, or charge accounts. Under this law, debt collectors other than your creditor cannot:
Fair Housing Act (FHA)
The Fair Housing Act prohibits discrimination in housing-related transactions based on race, color, religion, sex, national origin, familial status, or handicap.
Real Estate Settlement Procedures Act (RESPA)
When you are closing on a mortgage, the Real Estate Settlement Procedures Act requires that lenders provide you with accurate and timely information on the costs of settlement, such as loan origination fees (points), brokers’ commissions, and title charges. RESPA was designed to prevent abusive practices, such as kickbacks for loan referrals.
Truth In Lending Act (TILA)
This law requires lenders to disclose the total cost of a loan, including the finance charge and the Annual Percentage Rate, or APR. In addition, it gives consumers the right to cancel certain types of home loans within three days.