Consumer Protection Laws That Will Protect You And Your Wallet

Don't Be A Victim Of Abusive Business Practices- Every Consumer Has Rights.

We’ve seen the headlines in the news time and time again. Yet another business is found guilty of taking advantage of the consumer by way of abusive business practices.  While the bad news is that these abuses seem to be way too rampant, the good news is that as a consumer, you are protected.  Whether you are merely facing unfair business conduct or actual fraud, consumer rights and consumer protection laws provide a way for individuals to fight back.

 

Consumer protection laws are a form of government regulation that exists at both the federal and state level.  There are several government organizations that promote consumer protection such as the Federal Trade Commission which was created in 1914.  Their mission is three-fold:

  • To prevent business practices that are anti-competitive or deceptive or unfair to consumers; 
  • To enhance informed consumer choice and public understanding of the competitive process, and;
  • To accomplish this without unduly burdening legitimate business activity.

The Better Business Bureau is another organization that works to protect the consumer.  

So what are some of the key consumer protection laws you should know?  Here are a few important laws that everyone should be aware of:   

Bankruptcy

Facing bankruptcy is obviously not a good financial position to be in.  However, should you find yourself in this unfortunate situation, there are three primary forms of bankruptcy under Title 11 of the U.S. Bankruptcy Code that can give an individual, married couple, or a business various types of debt relief.

However, do keep in mind that a bankruptcy filing can remain part of a credit record for up to ten years which can limit creditworthiness for an extended period of time.  The three types of bankruptcy filings are:

  • Chapter 7- Provides for the total liquidation of an individual’s or business’ assets and liabilities. The debtor is not subject to salary/wage garnishment after filing Chapter 7.  State laws vary, but certain property is excluded from liquidation in a Chapter 7 bankruptcy, such as a residence.  However, some debts cannot be discharged, such as alimony, child support, and borrowed funds used to commit criminal activity.  Remember, exclusions and exceptions vary by state.
    • Chapter 13- Similar to Chapter 11, Chapter 13 prohibits creditors from foreclosing on an individual's or married couple's debt while allowing the reorganization of personal debt. There are requirements for income relative to debt and limitations on total debt in order to pursue a Chapter 13 filing.
    • Chapter 11- Allows a business or self-employed individual to continue to operate without fear of foreclosure while debts are reorganized under the review of the bankruptcy court. Unlike Chapter 13, the reorganization is subject to approval by a substantive majority of the creditors.

    Fair Credit Reporting Laws

    Congress has passed several laws that attempt to protect consumers when they obtain or attempt to obtain credit.  These are called Fair Credit Reporting Laws.  Remember, credit and your credit report are critically important and can be used in a number of ways such as application for credit, insurance applications, and employment applications.  A few of the more relevant laws are:

    • Equal Credit Opportunity Act- The Equal Credit Opportunity Act makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age.
      • Fair Credit Reporting Act (1971), Consumer Credit Reporting Reform Act (1996) and the Fair and Accurate Credit Transaction Act of 200- These Acts provide consumers protection from harm due to incorrect credit report information and from invasion of privacy in the collection and dissemination of information, provides consumers with the right to know who is gathering information about them and the nature of the information gathered, and provides consumers with an opportunity to challenge and correct the information that has been collected about them.
      • Fair Credit and Charge Card Disclosure Act- This act requires full disclosure about the terms of the credit card offer, including annual fees, interest rates, and late fees.

      Truth in Lending Act

      This act requires lenders to provide a written disclosures to borrowers about the terms and cost of consumer loans in a standardized the manner.

      The disclosure includes the costs associated with borrowing, how they are calculated, and the Annual Percentage Rate (APR) they are paying for the loan.

      Home Ownership and Equity Protection Act

      This act places restrictions on home loans to curtail predatory lending.

      Consumer Leasing Act

      The Consumer Leasing Act requires a lessor to provide a clear disclosure of important terms used in a lease agreement and a list of all costs charged for a lease.

      Electronic Fund Transfer Act

      This act minimizes the consumer’s liability if someone uses his or her ATM or debit card without permission.

      Privacy Policies

      The Federal Trade Commission focuses on many areas in regards to privacy policies.  The key areas the FTC addresses are:

      • Unfairness and Deception- Under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC enforces the promises made to consumers by companies regarding consumer privacy and the precautions they take to secure personal information of their customers.
      • Financial Privacy- By way of the Gramm-Leach-Billey Act (GLB Act), the FTC works to protect consumers’ personal information held by financial institutions.
      • Identity Theft Protection- The Identity Theft and Assumption Deterrence Act (1998) for the first time made identity theft a federal crime and gives consumers specific rights when they become (or believe they have become) the victim of identity theft.

      Have you ever been a victim of unfair business conduct or fraud?  Be sure that you understand your consumer rights and don’t be afraid to seek help or compensation if you feel that you have been treated unfairly. 

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      Disclosure:  This information is provided to you as a resource for informational purposes only.  It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors.  Past performance is not indicative of future results.  Investing involves risk including the possible loss of principal.  This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions. 

      Wes Moss is the Chief Investment Strategist at the financial planning firms Capital Investment Advisors and Wela. He is also the host of the Money Matters radio show on WSB Radio. In 2014, Moss was named one of America’s top 1,200 financial advisors by Barron’s Magazine. He is the author of several books including his most recent, You Can Retire Sooner Than You Think  - The 5 Money Secrets of the Happiest Retirees, which has been one of Amazon’s best-selling retirement books in 2014.