Ashley has a JD degree and is an attorney. She has extensive experience as a prosecutor and legal writer, and she has taught and written various law courses.
According to a 2012 poll, approximately 40% of Americans carried credit card debt from month to month. The average American adult carried nearly $5,000 in traditional credit card debt, not counting zero-balance or store-issued cards.
Are you one of these debtors? Are you any other type of debtor? Do you have a mortgage or a car loan? If so, you'll be pleased to know that there are many laws and regulations in place for your protection. This is Creed, and he's going to teach us about the laws and services involved in credit protection.
Credit protection is just one of the many forms of consumer protection. It's a collection of laws, regulations, and services designed to help preserve credit health for both individuals and businesses. The protections are geared toward both those who seek credit and those who are already debtors. The credit protection efforts mostly work to shield consumers from any practice that might harm a consumer's ability to obtain future credit, typically by preventing practices that might unfairly result in an adverse impact to the consumer's credit score.
A credit score generally reflects the creditworthiness of the entity. Individuals, if they've applied for or ever received credit, will usually have a credit score. Small businesses will also usually have a credit score. Other businesses will generally have a business credit profile. The profile will reflect the credit history and creditworthiness of the business.
Bureau of Consumer Protection
Our federal consumer protections, and therefore our federal credit protections, are regulated through the Federal Trade Commission (FTC). The FTC calls itself our nation's consumer protection agency. There are several different offices and bureaus within the FTC. One of these is the Bureau of Consumer Protection, or BCP. According to the FTC, this bureau works for the consumer to prevent fraud, deception, and unfair business practices in the marketplace.
The bureau has several main functions. The BCP:
- Enforces consumer protection laws and regulations
- Conducts investigations and litigation regarding fraudulent, unfair, or deceptive business practices
- Develops rules and regulations as well as suggests laws to Congress
- Educates individuals and businesses on their consumer and credit rights
The BCP contains seven different divisions, each with its own specialty. Several of these are involved specifically with credit protection services, such as:
- The financial practices division works to protect consumers from unfair or deceptive financial practices. This includes mortgage fraud, debt relief scams, harmful debt collection, and many other illegal practices.
- The privacy and identity protection division works to prevent identity theft. It suggests laws and regulations for the credit reporting industry in order to secure better credit protection. Results include the Fair Credit Reporting Act, which we'll talk about in a moment.
- The enforcement division litigates all FTC civil and administrative actions in order to enforce consumer protection issues, including all FTC cases involving credit.
Credit Protection Laws
The FTC's BCP regulates our federal credit protection laws. There are numerous federal credit protection statutes that have been developed and enacted throughout the years. Let's take a look at some of the federal laws specifically meant to protect our credit rights.
The Truth in Lending Act - It was enacted in 1968 and requires these lenders to disclose all credit terms, including finance charges. The goal is for borrowers to efficiently and accurately calculate the true cost of borrowing money.
The Fair Credit Billing Act - It's an amendment to the Truth in Lending Act enacted in 1974. It instituted several provisions that speak directly to credit protection. For example, it requires credit card companies to promptly credit accounts and correct billing errors.
The Fair Debt Collection Practices Act was enacted in 1977. It prohibits various abusive debt collection practices. For example, it prohibits debt collectors from calling you before 8:00 a.m. or after 9:00 p.m. in your time zone.
The Fair Credit Reporting Act - This is part of the Truth in Lending Act, enacted in 1970. It allows consumers access to their credit reports and sets out the procedures consumers can follow to correct any reporting errors or dispute any reported information.
The Fair Credit and Charge Card Disclosure Act is an amendment to the Truth in Lending Act, enacted in 1988. It brought about a fuller disclosure of the terms and conditions contained in credit card applications, such as interest rates and annual fees.
The Equal Credit Opportunity Act was enacted in 1976. It prohibits creditors from discriminating against applicants with respect to any credit decision. Discrimination can't be based on race, color, religion, national origin, gender, marital status, age, the fact that the applicant receives public assistance, or because the applicant exercised rights under the Consumer Credit Protection Act.
The Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD Act, became effective in 2010. It places several different prohibitions on credit card companies. For example, companies can no longer issue credit cards to people under age 21 without proof the person can pay the debt or without a parent or guardian co-signing the application.
Let's review. Credit protection is a form of consumer protection geared toward preserving a consumer's credit score. It's a collection of laws, regulations, and services designed to help preserve credit health for both individuals and businesses. Our federal credit protections are regulated through the Federal Trade Commission (FTC).
The FTC is made up of several different offices and bureaus. Credit protection is specifically addressed through the FTC's Bureau of Consumer Protection, or BCP. The BCP works for the consumer to prevent fraud, deception, and unfair business practices in the marketplace.
The FTC's BCP regulates our federal credit protection laws. There are numerous laws that have been enacted over the years in order to better protect consumers' credit. Some of these important laws are:
- The Truth in Lending Act required lenders to more fully disclose loan terms.
- The Fair Credit Billing Act required companies to more closely protect consumers by promptly posting credits and correcting errors.
- The Fair Debt Collection Practices Act prohibited various abusive debt collection practices.
- The Fair Credit Reporting Act allowed consumers better access to their credit reports.
- The Fair Credit and Charge Card Disclosure Act required a fuller disclosure of the terms and conditions contained in credit card applications.
- The Equal Credit Opportunity Act prohibited discrimination against credit applicants.
- The Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD Act, strengthened restrictions on companies regarding several items, including issuing cards to minors.
After watching this lesson, you should be able to define credit protection and explain the laws and services associated with it. You might be capable of listing some functions of the FTC's Bureau of Consumer Protection and you could recall the number of divisions it has.
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