Lesson 9-3 Consumer Protection Laws LEARNING GOALS -LIST AND EXPLAIN CONSUMER PROTECTION LAWS THAT ARE RELATED TO CREDIT -DISCUSS THE PROCESSES OF USING ALTERNATIVE DISPUTE RESOLUTION AND FILING A LAWSUIT -RECOGNIZE CREDIT SCAMS AND WAYS TO PROTECT YOURSELF

Consumer Credit Laws  Investigate Credit Denials – it may because there is inaccurate information in your credit file. o The Fair Credit Reporting Act grants you the right to know what is in your credit file. o You have the right to have inaccurate data investigated, corrected, and deleted from your file, and the credit bureau is required to issue a new report to creditors. o If the damaging information in your file is correct but misleading, you can write your own statement giving your side of the issue.  Review your credit report – consumers have the right to one free copy of their credit reports annually. o Request a credit report at AnnualCreditReport.com  Enroll in a credit protection service, which is a plan that provides credit monitoring for a fee. o The service will notify you of any changes to your credit file and let you know when anyone accesses your credit file for any reason.

Consumer Credit Laws  The Consumer Credit Protection Act of 1968 (Truth-In-Lending Act) requires to fully inform consumers about the cost of credit in a loan or credit agreement. The agreement must contain the following: o Description of the item being purchased o Cash price of the item being purchased o Down payment or trade-in-price o Amount financed o Any service fees or other costs being added to the price o Finance Charge o Annual percentage rate o Deferred-payment price o Amounts and dates of payments o Method of computing finance charges in case of early payoff o This act also limits a person’s liability to $50 after a credit card is reported lost or stolen.

Consumer Credit Laws  The Credit Card Act of 2009 (also known as the Credit Card Accountability, Responsibility, and Disclosure Act) is a comprehensive reform by credit card law to establish fair practices related to credit. o Protects consumers from arbitrary interest rate increases by giving cardholders advance notice of increases and the right to cancel the card o Prevents interest from being charged on purchases paid on time during the billing cycle o Eliminates due-date gimmicks by requiring card companies to mail bills at least 21 days before the due date. o Requests fair allocation of payments by applying them to higher-interest-rate balances first. o Limits fees card companies can charge o Requires a minimum payment explanation o Limits credit cards issues to teens (under the age of 21) without a cosigner.

Consumer Credit Laws  The Fair Credit Billing Act sets requirement for resolving billing disputes.  The law applies to open-end credit, such as store or credit card accounts. It does not apply to installment loans.  A consumer has 60 days form the day a bill is received to file a dispute. Then the creditor has 30 days to respond.  Within 90 days after receiving the complaint, the creditor must either correct the error or show why the bill is correct.  This law helps consumers resolve errors on their accounts in a timely manner.

Consumer Credit Laws  The Equal Credit Opportunity Act protects consumers from discrimination in the granting or denying of credit based on o Gender o Marital Status o Religion o National Origin o Race o Color o Age  The Fair Debt Collection Practices Act protects consumers from abusive collection practices by creditors and collection agencies. Debt collectors must be sure the bill is accurate and allow the consumer to dispute it. Disputed amounts must be resolved before they can be collected.

Methods to Resolve Credit Disputes  Alternative Dispute Resolution is a method of settling a dispute using a neutral third party. This is usually much cheaper than going to court and faster. o Negotiation occurs when two people get together, with or without a neutral third party, to come to an agreement. o Mediation, the next level of resolution, involves using a neutral third party to guide the process. The mediator talks to both parties to hear both sides of the issue and then makes a proposed settlement. o Arbitration is the highest level of resolution. A third party, called an arbitrator, listens to both parties and then makes a decision. Arbitration may take months. Both sides present their case formally, and rules of law are followed. The arbitrator is a professional who know the law and is able to understand the issues.

Methods to Resolve Credit Disputes  Filing a lawsuit  Small Claims Court is a simple and quick method of resolving a matter involving a small amount. o The plaintiff files a document call a complaint o The complaint is served on the defendant o The two parties appear before a judge, whose decision is final. Attorneys are not involved. o Process usually takes a few weeks to a few months.  Regular trial courts settle disputes involving larger dollar amounts. o Attorneys represent both sides. o If many consumers have similar complaints about the same defendant, a class action lawsuit may be filed on behalf of all of them. o Process could take months and cost thousands of dollars in attorneys’ fees.

Credit Scams  Credit Repair is a scam in which a company claims to be able to “fix” your poor credit record and give you a clean credit history. o No one can erase bad credit. o Advice they give is free of charge from various government and nonprofit agencies.  Identity Theft occurs when someone uses your personal information without your permission to commit fraud or other crimes. o Fastest growing crime in America o If you are a victim of identity theft, take the following steps immediately: 1)Close credit and bank accounts 2)Have a fraud alert placed on your credit reports 3)File a complaint with the Federal Trade Commission 4)File a report with your local police. 5)Contact other government agencies. 6)File a report with the Social Security Administration

Assignment Pg. 306 – do problems 1-11, 13, 16