Consumer Laws

There are four Federal laws have been established to protect consumers’ credit reports. The following is an overview of the most common laws pertaining to consumer rights protection. These are the basics of what the average consumer should know. This is not an official legal interpretation of these laws, but instead a set of basic facts meant to assist the average consumer in understanding his or her rights.

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act, Public Law No. 91-508, was enacted in 1970 to promote accuracy, fairness, and the privacy of personal information assembled by Credit Reporting Agencies (CRAs).

Credit Reporting Agencies assemble reports on individuals for businesses, including credit card companies, banks, employers, landlords, and others.  The FCRA provides important protections for credit reports, consumer investigatory reports, and employment background checks. The FCRA is a complex statute that has been significantly altered since 1970 by Congress and the courts. The Act’s primary protection requires that CRAs follow “reasonable procedures” to protect the confidentiality, accuracy, and relevance of credit information. To do so, the FCRA establishes a framework of Fair Information Practices for personal information that include rights of data quality (right to access and correct), data security, use limitations, requirements for data destruction, notice, user participation (consent), and accountability.

Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act is a consumer protection law passed by the U.S. Congress and signed into law by President Jimmy Carter in 1977. It is designed to protect consumers from abusive, unfair and deceptive practices used by third-party debt collectors. It allows a consumer to dispute any claims made by a debt collector and request validation of the debt collector’s claims. The law also outlines what actions are acceptable for debt collectors to use in order to seek payment from a consumer. The law only applies to personal financial deals. Any debt incurred to run a business is not subject to the law. It has been changed and updated over the years.

Fair and Accurate Credit Transaction Act (FACTA)

FACTA was designed to lower the risk of identity theft and consumer fraud. It enforces the proper destruction of consumer information, such as name, address, SSN, credit information. Also included in this bill is the necessity to destroy data compiled from this information.

“Any person who maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose” in electronic or paper form must “take reasonable measures to protect against unauthorized access or use of the information in connection with its disposal.” – or to “properly dispose of such information or compilation”.

FACTA basically requires that all businesses – regardless of size and industry – properly protect and dispose of the personal information they collect about their customers and employees.

The FTC is responding to the fact that identity theft is considered the fastest growing crime in the country, and this agency wants to prevent valuable consumer or employee information from being easily discovered and used for nefarious purposes with criminal intent.

Credit Card Accountability Responsibility and Disclosure Act

This is the most current consumer credit law and was enacted on May 22, 2009, and it amends the Truth in Lending Act, the Federal Trade Commission Act and the Electronic Funds Transfer Act.

This bill is very comprehensive and we suggest reading about it at It includes new rules about annual percentage rate increases, fees and finance charges, double billing cycles, over limit fees, fixed rates, statement delivery and due dates and various other payment rules.

The basic reason for this bill is to increase transparency within the credit card industry. This bill will make it more difficult for creditors to hide fees in fine print and raise your APR without you knowing about it well in advance. The bill is designed to protect consumers from predatory creditors.

Consumer Credit Protection Act

Also known as the Truth In Lending Act, CCPA is an Act to safeguard the consumer in connection with the utilization of credit by requiring full disclosure of the terms and conditions of finance charges in credit transactions or in offers to extend credit; by restricting the garnishment of wages; and by creating the National Commission on Consumer Finance to study and make recommendations on the need for further regulation of the consumer finance industry; and for other purposes.

Credit Repair Organizations Act

The CROA is a section of the Consumer Credit Protection Act.  Section 401 states that it can be called the “Credit Repair Organizations Act”.  The statute was signed September 30, 1996 by President Bill Clinton making it illegal for credit repair companies from charging large sums of money and/or making promises that they could not keep.  It is meant to stop credit repair companies from practicing improper business methods that can cause financial hardship for consumers.

The Equal Credit Opportunity Act

15 U.S.C. 1691 et seq. prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act.

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