Fair debt collection” is about more than just the federal Fair Debt Collection Practices Act (FDCPA) and “little FDCPA’s” (the state co-parts to the federal law) — it includes all consumer protection laws regulating debt, credit and banking. This is because “debt collection” can only truly be “fair” so long as debt creation, credit granting and reporting, and debt payment are also all fair.
There are some federal debt, credit and banking consumer protection laws every consumer just must know, period. They include the Truth in Lending Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Electronic Fund Transfer Act, the Telephone Consumer Protection Act, the Magnuson-Moss Warranty Act, the Fair Credit Billing Act, the Equal Credit Opportunity Act, the Credit Repair Organizations Act and the Real Estate Settlement Procedures Act. Knowing these laws, or having no cost court representation under these statutes, can help protect you from being taken advantage of by businesses large and small in your everyday consumer debt, credit and banking transactions.
These laws can be complicated, but knowledge of these legal requirements, and more importantly, the ability to spot a creditor, reporter or collector’s illegal act, can make all the difference and give you leverage in any situation. If any of your rights under any of these laws are violated, the tables can get turned and the business violating you may just owe you money – money that you can take as cash, or use to reduce your balances. How? Well, that’s what you must know.
The Fair Credit Reporting Act (FCRA) promotes the accuracy and privacy of information kept and distributed by the nation’s consumer reporting companies by defining how information must be recorded, verified and safeguarded. It is one of several federal credit laws that regulates consumer reporting agencies and consumer reports. The information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in FCRA. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. Also, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports. Further, users must identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer. Violations of FCRA may entitle a consumer to actual damages, statutory damages from $100 to $1,000 and court costs and attorney fees.
Truth in Lending Act, 15 U.S.C. §§ 1601-1667f, as amended
The Truth in Lending Act (TILA) protects consumers by requiring meaningful disclosure of credit terms. TILA requires all creditors who deal with consumers to make certain written disclosures concerning the cost of the credit, such as the finance charges, annual percentage rate and other fees charged by the creditor. TILA covers all types of credit transactions, including car purchases, home purchases, refinancing and lines of credit, credit cards, payday loans and private student loans. TILA also provides consumers with a right of rescission when a consumer takes out a non-purchase money loan secured by their residence. If a creditor violates a consumer’s rights under TILA, a consumer may be entitled to recover actual damages and statutory damages of up to $2,000 on loans such as car loans and home equity lines of credit, up to $4000 for home purchase loans and up to $5,000 for credit card issues and lines of credit not secured by your home. In addition, TILA contains a “fee-shifting” provision which may require the defendant to pay for the plaintiff’s attorney fees and court costs.
The Electronic Fund Transfer Act (EFTA) protects consumers when engaging in electronic fund transfers, including direct deposits, point of sale (POS), debit cards withdrawals, ATM cards, and credit cards sales. EFTA regulates electronic payments such as debit cards, checks by phone, automatic bill pays, ATM and debit card overdraft fees, and gift cards. The Act requires banks and people collecting payments through an electronic transfer, such as a creditor or debt collector to provide certain disclosures regarding the payments. The EFTA also requires banks to promptly investigate consumer complaints and errors regarding electronic debits or credits from their bank accounts. Like other credit laws, the EFTA provides penalties for violation that may allow a consumer to recover the money lost because of a violation AND statutory penalties of $100 to $1,000, plus court costs and attorney fees.
Telephone Consumer Protection Act, 47 § USC 227, as amended
The Telephone Consumer Protection Act (TCPA) restricts telephone solicitations (i.e., telemarketing) and the use of automated telephone equipment. The TCPA limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines. When your TCPA rights are violated you can receive $500 per call, text message or fax, and this amount can be tripled where the violations are wilful.
The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, because you get public assistance or because you in good faith exercise of any rights under the federal consumer protection statutes. ECOA also requires creditors to provide applicants with the reasons underlying decisions to deny credit. If a creditor violates this statute, a consumer may be able to recover actual damage, punitive damages up to $10,000 and court costs and attorney fees.
The Credit Repair Organizations Act (CROA) prohibits untrue or misleading representations and requires certain affirmative disclosures in the offering or sale of “credit repair” services. CROA applies to credit repair companies. These are companies that promise to improve a consumer’s credit report, credit history or credit rating. The CROA provides that companies offering credit repair services comply with specific rules. The Act requires that certain disclosures be made prior to signing a credit repair contract, that any contract be in writing and that a credit repair companies may not charge any fees prior to performing any work. CROA requires credit repair companies to provide disclosures to consumers prior to signing a credit repair contract, allows for a 3-day right to cancel the contract and prohibits upfront fees.
For example, if:
- a company promises to improve a consumer’s credit score, it must provide the consumer with certain information about CROA and credit reporting prior to the consumer signing a contract for credit repair services.
- a consumer signs a credit repair service contract, that contract must include the option to cancel within 3 business days of signing.
- a company promises to improve a consumer’s credit score or credit history, it cannot charge any fee until it has performed work – no prepayment is allowed.
Fair Credit Billing Act, 15 U.S.C. §§ 1666-1666j, as amended
The Fair Credit Billing Act (FCBA) protects consumers from unfair billing practices and to provide a mechanism for addressing billing errors in “open end” credit accounts, such as credit card or charge card accounts. The FCBA requires prompt written acknowledgment of consumer billing complaints and investigation of billing errors by creditors. FCBA also prohibits a creditor from taking actions that adversely affects the consumer’s credit standing until an investigation is completed, and affords other protection during disputes. In addition, it requires that creditors promptly post payments to the consumer’s account and either refund overpayments or credit them to the consumer’s account. Violations of the FCBA may entitle consumers to actual damages as well as statutory damages up to $5,000, as well as court costs and attorney fees.
The Real Estate Settlement Procedures Act (RESPA) is intended to give consumers timely disclosures of the costs to be paid in mortgage settlement transactions, and to prohibit certain practices such as kickbacks and referral fees. RESPA requires certain information be provided to a consumer prior to the closing of a loan secured by a lien on residential property. RESPA also prohibits home sellers from requiring the use of a specific title insurance company and lenders from referring business to providers with whom the lender is affiliated without providing information about the affiliation. Additionally, RESPA regulates servicers of mortgage loans, lenders, and settlement service providers in certain situations such as real estate agents, closing attorneys and title companies. These are companies that promise to improve a consumer’s credit report, credit history or credit rating. This includes: home purchase loans, refinances, assumption of loans, home improvement loans, home equity lines of credit and reverse mortgages.
Magnuson-Moss Warranty Act, 15 USC §§ 2301-2312, as amended
The Magnuson-Moss Warranty Act (MMWA) is the federal lemon law, imposing disclosure and repair requirements on consumer products accompanied by a written warranty. Like state lemon laws, the MMWA isn’t just about the existence of a defect, but rather, about a warranted vehicle’s unreasonable repair history. Remedies can include a refund or cash compensation. And like the other consumer protection laws discussed on this page, the MMWA contains fee shifting provisions, meaning an experienced lemon law firm can represent you at no cost, charging its time and fees to the manufacturer.