Know Your Rights: Understanding Consumer Credit Act Protections
It’s important to know what various consumer credit act provisions and laws exist to protect consumers. Too many people who don’t know their rights don’t take advantage of the laws that protect them. We routinely talk to consumers about how to ensure that they aren’t being victimized by debt collectors and other financial predators.
Different Kinds of Consumer Credit Act Protections
There are many different kinds of consumer credit act protections that many people may not know about. Here are just a few:
Consumer credit protection act: This protects employees from being fired by their employers because of a wage garnishment, and sets a limit on the size of garnishments that may be applied to an employee’s earnings.
Truth in Lending Act: Requires creditors to make written disclosures to consumers about their transactions, including annual percentage rate and other credit terms.
Fair Credit Billing Act: This consumer credit act requires investigation of billing errors by creditors and prohibits creditors from taking adverse action against consumers until investigations are completed. It also requires payments to be applied to consumer accounts promptly.
Fair Credit Reporting Act: This protects consumer privacy with regard to credit files, and requires credit bureaus to investigate disputed credit file information. Requires lenders, insurance companies, and others to notify consumers if adverse action is taken due to credit file information. (See “Get a Free Credit Score if You Are Denied Credit")
Equal Credit Opportunity Act: prohibits racial or ethnic discrimination when considering requests for credit. Also includes gender, age, marital status, religion, or other forms of discrimination. Requires creditors to provide applicants with reasons why they are denied credit.
Fair Debt Collection Practices Act: Limits the activities of 3rd-party debt collectors to protect consumers. (See FDCPA Voicemail Rules May Change)
Fair and Accurate Credit Transactions Act: protects and improves the accuracy of credit records, grants consumers the right to access free credit reports annually from each of the major credit bureaus, and offers protections against identity theft. (See “Where can I obtain my free credit reports?”)
Any given consumer credit act contains a number of clauses affecting a wide variety of lending practices. These highlights should give you a better idea of the many laws and regulations that have been put in place to protect you.
Understanding your rights under these acts can empower you to make informed financial decisions and avoid falling victim to unfair or predatory practices.
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over two decades of experience in the industry.
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