Your Credit & The Law Chapter 27

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Chapter 27 Learning Objectives Explain how government protects credit rights Explain how government protects credit rights Name federal laws that protect consumers Name federal laws that protect consumers Identify Consumers’ credit rights Identify Consumers’ credit rights Describe Credit Problems Describe Credit Problems

Why This is Important Specific rights and protections exist under the law to protect you and your credit rating Specific rights and protections exist under the law to protect you and your credit rating Issues concerning Money often lead to dishonesty that many cannot defend themselves against Issues concerning Money often lead to dishonesty that many cannot defend themselves against

Where Can a Consumer Seek Help Problem: Problem: –Retailer, nonbank credit card issuer, consumer finance company, state- chartered credit union or bank, noninsured savings & Loan Insitution Who can help: Who can help: –Federal Trade Commission

Where Can a Consumer Seek Help Problem: Problem: –National Bank –Federal Reserve Member Bank –Insured Banks –Insured Savings & Loan Institutions –FHA mortgage progam –Federal Credit Union Who can help: Who can help: –Comptroller of the Currency –Division of Consumer & Community Affairs –Federal Deposit Insurance Corporation –Federal Housing Finance Board –Housing & Urban Development –National Credit Union Administration

Protecting Your Credit Rights Federal & State Governments protect consumers by regulating the credit industry Federal & State Governments protect consumers by regulating the credit industry Usury Law Usury Law –Restricts the amount of interest that can be charged for credit Other laws/regulations cover: Other laws/regulations cover: –Credit application process, credit history information, privacy, debt collection, education of consumers

Consumer Credit Protection Act “Truth in Lending Law” “Truth in Lending Law” –What do you think that means? –Why would government have enacted such a law? –Cost of credit was not always provided –Law requires creditors to inform consumers about the costs of credit –Law protects consumers if cards are lost or stolen

Truth-in-lending Disclosure Provides the costs that a creditor gives to a borrower Provides the costs that a creditor gives to a borrower Part of the Consumer Credit Protection Act Part of the Consumer Credit Protection Act Costs must be expressed in two ways: Costs must be expressed in two ways: –Dollar Cost & APR Allows the consumer to see the total amount a credit purchase will cost Allows the consumer to see the total amount a credit purchase will cost States credit terms & conditions States credit terms & conditions – gas/rfs_credit_terms.html gas/rfs_credit_terms.htmlwww.onlinecreditcenter2.com/exxon/corp/ gas/rfs_credit_terms.html

Advertising Credit Part of Consumer Credit Protection Act Part of Consumer Credit Protection Act States: States: –Advertising must tell number of payments –Amount –Period of payments if down payment is given (how long will the payments last)

Protecting Card Owners Part of Consumer Credit Protection Act Part of Consumer Credit Protection Act Payment limited to $50 for unauthorized purchases if card is lost or stolen Payment limited to $50 for unauthorized purchases if card is lost or stolen Credit Card companies cannot send cards to consumers who did not request them Credit Card companies cannot send cards to consumers who did not request them

Equal Credit Opportunity Act States: States: –Information provided on a credit card application can be judged only on the basis of financial responsibility –No one can be denied credit based gender, age, ethnicity, religion –Three reasons credit can be denied Low income, large current debts, poor record of making payments in the past Low income, large current debts, poor record of making payments in the past –Those denied credit must be informed in writing within 30 days

Fair Credit Reporting Act Credit History goes on file at one or more credit bureaus Credit History goes on file at one or more credit bureaus Lenders use them when considering loans Lenders use them when considering loans File includes File includes –Personal, employment, financial information –Inaccurate info was often included in the past This Act protects consumers from having inaccurate/false info in the file This Act protects consumers from having inaccurate/false info in the file

Right To Know You have the right to know what is in your credit file You have the right to know what is in your credit file Incorrect information must be removed if found Incorrect information must be removed if found File must contain both sides of a story if a problem arises with a business File must contain both sides of a story if a problem arises with a business

Right To Be Notified Fair Credit Reporting Act states: Fair Credit Reporting Act states: –Must be notified when credit is being investigated –If denied credit, insurance, or a job because of a credit report, you must have access to the name and address of the credit bureau

Right to Privacy Only authorized persons can see your credit report Only authorized persons can see your credit report Authorized persons: Authorized persons: –If you apply for additional credit, job, insurance