Credit Protection Laws & Agencies: Overview

Nathan Mahr, Ashley Dugger
  • Author
    Nathan Mahr

    Nathan has taught English literature, business, social sciences, history, and writing for over five years. He has a B.A. in Comparative History of Ideas from the University of Washington.

  • Instructor
    Ashley Dugger

    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.

Discover what is meant by credit protection, why it is important and the role of the bureau of consumer protection. Explore some federal credit protection laws. Updated: 03/15/2022

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What is Credit Protection?

Credit protection is a collection of laws and regulations designed to shield consumers from unfair or deceptive credit practices. Credit protection can be understood as a series of federally mandated consumer protections that are designed to preserve credit health for businesses as well as individuals. There are several consumer protection laws relating to credit protection and a large variety of others relating to various industries such as warranties, the Magnuson-Moss Warranty Act, and commercial transactions, the Uniform Commercial Code.

A credit score is a three-digit number that measures the creditworthiness of a consumer. It is based on credit history and credit files at the credit bureaus.

Why is Credit Protection Necessary?

There is a large uptake of credit by American citizens and so credit protection has become more relevant. In 2017, Americans had an average credit card debt of $5,700. This number has been on the rise in recent years. The total credit card debt in America is now over $1 trillion.


Credit card debt is on the rise in America

Color. Credit cards with logos showing


Why is credit protection important? Credit protection is important because it helps to ensure that credit is available to consumers when they need it. It also helps to protect consumers from unfair or deceptive credit practices. Credit protection can also help to preserve credit health for businesses. Credit protection laws help to ensure that credit scores are fair and accurate. They also help to protect consumers from inaccurate or unfair credit reporting.

What Would Happen if Credit Protection Laws Did Not Exist?

There would be a lot more debt and a lot more people would be in financial trouble if there were no credit protection laws. Credit protection laws help to keep the credit system fair and accessible for everyone. Businesses need protection from defaulting on loans and from unfair or deceptive credit practices. Individuals also need protection from unfair or deceptive credit practices, from being denied credit, and from having their credit scores lowered unfairly.

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  • 1:54 Bureau of Consumer Protection
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Role of the Bureau of Consumer Protection in Credit Protection

The Bureau of Consumer Protection (BCP) is a government agency that is responsible for enforcing credit protection laws. It also provides information and education to consumers about their credit rights and responsibilities. The BCP helps to ensure that credit bureaus are fair and accurate in their reporting. It also helps to protect consumers from unfair or deceptive credit practices. The Bureau of Consumer Protection is a part of the Federal Trade Commission (FTC).


The FTC and its subsidiary agency the BCP are responsible for consumer credit protection

The official seal of the Federal Trade Commission


Federal Credit Protection Laws

The BCP is responsible for regulating credit protection laws including:

  • The Fair Debt Collection Practices Act: This law protects consumers from unfair or abusive debt collection practices. For example, this law may be violated by a debt collector if someone missed some payments on their credit card and is now receiving twenty calls per day.
  • The Fair Credit Billing Act: This law protects consumers from unfair or deceptive credit practices. It requires creditors to correct errors on credit reports. It also requires creditors to provide written notice of changes to the terms of credit agreements. An example of this law being violated would be if the credit issuer reports an inaccurate payment date. Such as if someone had a credit card payment due on the 30th, sent the payment in on the 25th but the issuer posted the payment on the 5th of the next month and incurred a late fee.
  • The Fair Credit Reporting Act: This law protects consumers from inaccurate or unfair credit reporting. It requires credit bureaus to provide consumers with a free credit report once every 12 months. It also requires credit bureaus to correct errors on credit reports. For example, if a person noticed a listing of a new credit card in their name that they had not authorized they could file a dispute utilizing the Fair Credit Reporting Act.
  • The Electronic Fund Transfer Act: This law protects consumers from unfair or deceptive electronic fund transfers. It requires financial institutions to provide consumers with information about their rights and responsibilities.
  • The Truth in Lending Act: This law protects consumers from unfair or deceptive credit practices. It requires creditors to disclose the terms of credit agreements. It also requires creditors to provide written notice of changes to the terms of credit agreements.
  • The Credit Repair Organizations Act: This law protects consumers from unfair or deceptive credit repair practices. It requires credit repair organizations to disclose the terms of their services. It also requires credit repair organizations to provide a written contract to consumers.

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Frequently Asked Questions

What does credit protection do?

Credit protection ensures consumers and businesses are protected from inaccurate reporting, predatory lending, and any other unfair reporting practices from banks and lending institutions.

What is credit protection on a credit card?

Credit protection refers to the laws and regulations meant to shield consumers from unfair or deceptive credit practices. Credit protection is designed to preserve credit health for businesses and individuals and ensure they are treated equitably.

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