Laws and Agencies that Provide Financial Safeguards Consumer Protection

BIG IDEAS Credit and debt can be used to achieve ….? personal financial goals Consumer protection laws provide financial safeguards

What rights do you think you have as a consumer?

Consumer Protection Pre-Test The Credit CARD Act was passed in This law intends to prohibit credit card companies from targeting who? And it prevents them from being physically present to advertise where? Credit Card Companies are no longer allowed to offer ….. in exchange for signing up for their credit card Credit Card Companies now must require a co-signer or proof of income for any customer under the age of …..

The Securities and Exchange Commission (SEC) regulates………………..? What would be a violation or criminal activity that the SEC would investigate? 'Sarbanes-Oxley Act Of SOX‘- was enacted in response to the accounting scandals in the early 2000s. Scandals such as Enron, Tyco, and WorldCom shook investor confidence in financial statements and required an overhaul of regulatory standards. What did they do wrong?

Glass Steagall Act Prohibited what? When it was repealed, it led to what? Federal Trade Commission (FTC) protects consumers against who or what? Consumer Product Safety Commission – its main job is to …..? The Better Business Bureau - allows people to ……….?

Consumer Protection Laws Who provides these laws? Federal, state and local laws provide safeguards for personal finances Laws are monitored and enforced by different government organizations Securities and Exchange Commission (SEC) Federal Trade Commission (FTC) Consumer Product Safety Commission (CPSC)

Credit C.A.R.D. Act 2009 C ard A ccountability R esponsibility D isclosure Also called : “Credit Cardholders Bill of Rights”

C.A.R.D. ACT PROVISIONS Card issuers will be prohibited from marketing credit cards on campus (1,000 ft. barrier) (can not be at college sponsored events) bans card issuers from offering pizza, T-shirts, hats and other freebies in exchange for signing up for a credit card Under age 21 must have co-sign OR proof of ability to pay ………………………………..BUT………… They can still send mail offers to students living on college campus They can still offer “freebies” IF it does not require signing up for the card ***need to know for test

CARD ACT PROVISIONS Can no longer raise rates - *unless for specified reasons under the law More advance notice of rate hikes – was 15 days, now 45 days Fee restrictions Under age 21 must have co-sign OR proof of ability to pay must send statements 21 days before a payment is due. Current law requires a mere 14 days' notice. ***do not need for test

Securities and Exchange Commission Regulates the …. buying and selling of stock Monitors brokerage firms and stock exchanges Investigates possible “wrong doing” in regards to the trading of stocks and securities A large government bureaucracy

Securities and Exchange Commission Investigates potential manipulation of the market “Well-timed” sales of stock Often referred to as “insider trading” When a stock holder has “inside” knowledge about the future of a particular stock’s value

Securities and Exchange Commission Not all actions on the stock market are legal Rules and regulations are based on Acts passed by CongressActs passed by Congress

Definition of 'Sarbanes-Oxley Act Of SOX' An act passed by U.S. Congress in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations.

The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud. SOX was enacted in response to the accounting scandals in the early 2000s. Scandals such as Enron, Tyco, and WorldCom shook investor confidence in financial statements and required an overhaul of regulatory standards.

Do not need to know for test 1. Section 302: A mandate that requires senior management to certify the accuracy of the reported financial statement 2. Section 404: A requirement that management and auditors establish internal controls and reporting methods on the adequacy of those controls. Section 404 had very costly implications for publicly traded companies as it is expensive to establish and maintain the required internal controls.

Definition of 'Glass-Steagall Act‘ An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment banking business. The Act was passed as an emergency measure to counter the failure of almost 5,000 banks during the Great Depression. The Glass-Steagall lost its potency in subsequent decades and was finally repealed in 1999.

The Glass-Steagall Act's repeal in 1999 is believed in some circles to have contributed to the 2008 global credit crisis. Commercial banks, around the world, were saddled with billions of dollars in losses due to the excessive exposure of their investment banking arms to derivatives and securities that were tied to U.S. home prices.

Federal Trade Commission Provide financial safeguards Includes the Bureau of Consumer Protection Protects consumers against unfair, deceptive or fraudulent practices Enforces consumer protection laws enacted by Congress Regulates financial practices

Federal Trade Commission Originally created as a way for the federal government to engage in “Trust Busting” Still enforces antitrust regulations Protects consumers from fraud

Consumer Product Safety Commission Issues recalls on products available for purchase NOT food (FDA) Publishes information about product safety Publishes annual list of “safe holiday toys”

Name That Recall The electrical components of the tree’s light strings can overheat and melt, posing fire, burn, and shock hazards to consumers.

The bicycle’s front brake can fail, posing a crash hazard Name That Recall

the lamp cord was pulled into the crib by the infants, creating a strangulation hazard. Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product. Name That Recall Children’s wall-mounted lamps

The colored arches can break, creating a small part which poses a choking hazard to small children. Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product. Name That Recall

Other Organizations Better Business Bureau Ohio Consumer’s Council “Residential utilities consumer advocate” Educates consumers about utility issues Acts as a representative for Ohio residents in court against utility companies Electric, Water, Natural Gas, Telephone Allows a person to: Research companies File a complaint about a company Provide information about types of scams Is both national and local – Cleveland has a branch