Consumer Credit Protection Laws

When we refer to consumer credit, we are talking about the use of credit to finance transactions without having to pay the full amount of the merchandise at the time of checkout. The most common form of consumer credit is a credit card issued by a financial institution. Merchants may also provide financing for products which they sell. Banks may directly finance purchases through loans and mortgages. This type of consumer credit is most often used for cars and homes and other large purchases.

The law of consumer credit is primarily embodied in federal and state statutory laws. These laws protect consumers and provide guidelines for the credit industry. There are many different laws that protect both the lender as well as the borrower when it comes to consumers obtaining credit.

States have passed various statutes regulating consumer credit. Congress has passed consumer credit protection acts in part to regulate the consumer credit industry. It requires creditors to disclose credit terms to consumers. It also protects consumers from loan sharks, and generally investigates the consumer finance industry, among other things.

Credit card companies and credit reporting agencies are also regulated by Acts passed by Congress. These Acts also regulate debt collectors and provides for rules as to what they can and cannot do when attempting to collect a debt.

Let's face it, we need to have credit. We may not need it for everyday things like groceries and toiletries, but if we want to own a car or a home, it's necessary as not every consumer can pay cash for such high ticket items making obtaining credit a must.

From credit counseling agencies to credit card companies and credit lenders, consumer credit is a multi-billion dollar industry. Because we do need lines of credit to get some important things in our lives, it's a good thing that legislators realize that having consumer credit laws are needed so that abuse of the system doesn't occur.

The everyday consumer has at least one line of credit open, but the average in the United States shows that we have at least four to five lines of credit in some way, shape, or form. As a consumer, you must use your credit lines wisely and pay your installments on time. If you don't, you will find yourself with a bad credit rating and a bad credit report. Consumer credit can work for you or against you - it's really all up to YOU!

Some of the main Consumer Credit Protection Laws are:

Fair Debt Collection Practices Act (FDCPA) -

Fair Debt Col­lection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection.

Fair Credit Reporting Act (FCRA) –

The basic purpose is to require the credit reporting agencies to adopt reasonable procedures for providing consumer information in a manner that is fair to the consumer with regard to confidentiality, accuracy, and proper use of such information.

Fair and Accurate Credit Transactions Act of 2003 (FACTA) – This is an amendment to the FCRA to help prevent identity theft, improve resolution of consumer disputes, improve the accuracy of consumer records, and make improvements in the use of, and consumer access to, credit information, and for other purposes.

Fair Credit Billing Act (FCBA) – This law applies to “open ended” credit accounts, such as credit cards, and revolving charge accounts — such as department store accounts, to ensure creditors bill correctly. This act also allows consumers to dispute transactions with the creditor.

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