Chapter 5: Consumer Rights and Responsibilities
When you use credit, you enter into a contract – the financial institution lends you money with specific terms, and you agree to repay it under those terms. Therefore, as a borrower, you have both rights and responsibilities.
The Federal Trade Commission (FTC) enforces federal consumer laws. Any violation should be reported to the FTC at www.ftc.gov, 877-382-4357.
Truth in Lending Act (TILA)
The TILA requires credit issuers to disclose the following:
- The finance costs in dollars, annual interest rate, and any late or penalty fees that may be imposed.
- Written itemization of the amount borrowed and the total amount of the loan, including interest and fees, and the number, amount, and due dates of all payments necessary to repay the loan.
Fair Credit Billing Act (FCBA)
The FCBA offers the following protections under the law:
- Liability for a lost or stolen credit card is limited to $50 if you notify the card issuer within 30 days.
- If you purchase a defective item or substandard service by credit card, the payment can be withheld if the seller refuses to replace, repair, or otherwise correct the problem.
- If there has been an error in a credit card bill, the lender must correct it, or explain why the amount is believed correct, within 90 days after being notified.
Fair Debt Collections Practices Act (FDCPA)
The FDCPA regulates collection agencies’ conduct and specifically prohibits such action as:
- Calling before 8am, after 9pm, or at any other inconvenient time.
- Calling you at work if you have informed the collector that the calls are jeopardizing your job.
- Discussing your debt with a third party other than your spouse without your permission, except to leave a message that they are trying to contact you.
- Using profanity.
- Misrepresenting themselves. For example, a debt collector cannot say he is an attorney if he is not.
- Making false threats. If a collector says he is going to take a specific action against you to enforce the debt, he has to do it.
Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act
The Credit CARD Act was designed to protect credit cardholders and give them certain rights, including:
- Your interest rate cannot be increased during the first 12 months of opening a credit card unless you are more than 60 days late with a payment.
- An interest rate increase can only apply to new charges, not the pre-existing balance. (This rule does not apply if you are past due more than 60 days.)
- If your interest rate was raised due to making a payment late, the card issuer must reinstate the lower interest rate if you make on-time payments for six months.
- You cannot be charged an over-the-limit fee unless you authorize your credit card company to process over-the-limit transactions.
- If your due date falls on a weekend or holiday, your payment is considered on time if it is made on the next business day.
Debt and Lawsuits
A creditor or collector cannot take any wages, money, or property without first suing you in court, winning, and obtaining a judgment. (This does not apply to debt owed to the government. Also, for secured debt, the lender may not have to go to court first to repossess the collateral that secured the loan.) In most instances, you cannot go to jail for non-payment of debt, even if you have lost a lawsuit.
You may also have additional rights under state law. Check with your state’s Office of the Attorney General for more information. To locate your Attorney General, contact the National Association of Attorneys General at www.naag.org.