Consumer Rights Overview
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Understanding Your Rights as a Consumer

Have you ever felt that, when it comes to matters of money (credit, debt, loans, etc.), you're at a disadvantage as a consumer? After all, the big banks and credit card companies that lend you money have financial experts working for them to make sure their interests are protected, right? So who's looking out for you?

In theory, the government is. Unfortunately, too many consumers don't know about the legal protections available to them, and end up in financial distress - defaulting on loans, filing for bankruptcy protection or watching their homes foreclosed upon. With a little dose of prevention (in the form of learning the basics of consumer protection laws), you can protect yourself and your finances.

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Here's an overview of some important consumer laws in the United States and how they protect you.

Consumer Protection Housing Acts

  • Fair Housing Act (Civil Rights Act of 1968): This act prevents discrimination in the sale, rental or financing of a home based on factors including race, religion, gender, national origin, handicap and family status. It also prohibits lenders and real estate agents from advertising to specifically attract or deter homebuyers/renters in any of these categories.

Summary: Home lenders have to treat everyone equally.

  • RESPA (Real Estate Settlement Procedures Act) (1974): This act is intended to clean up the process of originating home loans. It prohibits certain (abusive) "kickbacks" between lenders, realtors and insurance companies, which allows consumers to get a loan offer free from sneaky tactics meant to benefit the various parties involved in the lending.

It also requires lenders to give borrowers a good faith estimate and certain HUD (Housing and Urban Development) disclosures - which allow borrowers to see where their payments are going - at the time of closing. This act also gives borrowers the right to submit a written request for investigation of an account he believes to be in error.

Summary: You're entitled to know how your mortgage will work and where your payments will go.

  • Community Reinvestment Act (1977): This law requires banks and thrifts to offer credit throughout their area of operation. In other words, it prevents "redlining," or targeting only wealthy individuals/neighborhoods with lending services. Its goal is to provide credit (including home loans) to underserved/less wealthy populations and commercial loans to small businesses.

Summary: Lenders can't target specific audiences with their loan offers.

  • HOEPA (Home Ownership and Equity Protection Act) (1994): This act is meant to curb predatory mortgage lending practices, particularly to subprime borrowers. Specifically, it requires lenders to include specific disclosures when borrowers are preparing to sign a loan, including that the borrower is not obligated to sign if she changes her mind and that the house will be foreclosed on if the borrower doesn't comply with the terms of the loan.

For loans with fixed interest rates, this law requires lenders to disclose the interest rate and monthly payment amount. For adjustable rate mortgages, lenders must notify borrowers that interest rates and monthly payments may fluctuate and can increase.

Summary: You're entitled to understand any loan you sign - if you don't understand it, don't sign!

Consumer Protection Credit Acts

  • Truth in Lending Act (1969): This act calls for increased disclosure of the terms of credit to borrowers - that is, it requires lenders to tell borrowers about the terms of their loans (including costs). It gives consumers the right to dispute and correct information on their credit bills and allows them to cancel some credit transactions that lead to liens on their homes.

Summary: Lenders have to tell you what you're getting into before you sign.

  • Fair Credit Reporting Act (1970): This law requires creditors to provide consumers with information about their credit, fix inaccuracies at the consumer's request and limit the amount of time that negative information can appear on a credit report (seven years for most negative actions, ten years for bankruptcy).

It also outlines the responsibilities of "information furnishers" (i.e. requires creditors to report information accurately) and mandates that anyone who uses credit information to make a negative decision (e.g. an employer not offering someone a job because of a weak credit history) must inform the consumer about the exact information that led to the decision.

Additionally, it gives consumers the right to request corrections and seek damages for any negative action caused by inaccurate reporting.

Summary: You get to know how your credit looks. If wrong information has been reported, you can contest it and seek damages (i.e. sue for money) if appropriate.

  • Fair Credit Billing Act (1974): This act, an amendment of the TILA, gives consumers the right to dispute in writing mistakes in their credit bills. It requires creditors to send bills at least 14 days before they're due and allows consumers to sue a credit card company (rather than the original vendor) if there's a problem with a dispute.

Common errors consumers might contest include billing for charges the consumer didn't make, charges made in the wrong amount, charges for goods not received, charges for goods not delivered as agreed, charges for goods damaged on delivery; failure to accurately reflect account payments; calculation errors; statements mailed to the wrong address; charges that cause the consumer to ask for validation and more.

Summary: If you see a mistake in your bill, you can dispute it until it's correct.

  • Fair Debt Collection Practices Act (1978): This act outlines acceptable and unacceptable behavior for debt collectors. It also gives consumers an avenue for disputing, correcting and receiving verification of information in credit reports.

Specifically, it prohibits the following: contacting a consumer before 8 am or after 9 pm; making telephone calls intended to annoy, abuse or harass a consumer; contacting consumers at work after being told not to; contacting consumers known to have a lawyer; deceiving a consumer or misrepresenting oneself to collect a debt; using abusive or profane language; contacting a third party about a debt and more.

It requires that creditors follow these terms: identify themselves to consumers and state their purpose; provide the consumer with information he or she requests in writing; notify the consumer of his or her right to dispute the debt, and more.

Summary: Debt collectors can't harass you or lie. You can contest debts, but you must do it in writing.

  • Fair and Accurate Credit Transactions Act (2003): An amendment to the Fair Credit Reporting Act, this gives consumers the right to receive one free credit report each year from each of the Big Three credit reporting bureaus (Equifax, Experian and TransUnion).

Summary: Go to to get your free credit report every year!

Want More Explanations? Talk to a Bankruptcy Lawyer!

These are by no means all the laws that protect you as a borrower and user of credit. In fact, these are only a handful of acts passed by the federal government. Each state has its own consumer protection laws as well. If you're interested in learning about more protections available to you, consider talking with a bankruptcy lawyer in your area.

Doing so will allow you to speak with someone who's familiar with consumer protection laws, since consumer protection issues often play into bankruptcy cases. Plus, if your rights have been violated, you may want to take legal action. Many of these laws give consumers the right to seek damages, which can be obtained through legal channels.

To take advantage of your consumer rights, fill out our free evaluation form or call us at 877-349-1309, and we'll put you in contact with a bankruptcy lawyer practicing in your area.

The above summary of laws is by no means all-inclusive and is not legal advice. Laws may have changed since our last update. For the latest information on bankruptcy laws, speak to a local bankruptcy lawyer in your state.

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