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.
