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're 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 and Consumer Financial Protection Bureau are two other examples of organizations that work to protect consumers. But what is that protection worth and how far does it extend? Here are a few important laws that everyone should be aware of:
Consumer Protection Laws for Bankruptcy
Bankruptcy may be an option of last resort for dealing with overwhelming debts. There are three primary types of bankruptcy protection that apply to consumers if you need debt relief and a buffer between yourself and your creditors. As outlined in the federal Bankruptcy Code , your options are:
- Chapter 7 Bankruptcy- Chapter 7 assumes that you're unable to pay your debts at all. With this type of bankruptcy filing, you can be shielded from creditor lawsuits but you may have to sacrifice some of your assets for liquidation. Those assets are then used to pay off the creditors named in your bankruptcy filing.
- Chapter 11- This type of bankruptcy 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. This reorganization would be subject to approval by the majority of your creditors but it essentially gives you an opportunity to create a reasonable repayment plan for outstanding debts.
- 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 but it may be more appropriate in cases where you'd like to be insulated against creditor lawsuits while retaining your assets.
While filing bankruptcy can protect you from creditors, it can't protect you from credit score damage. A bankruptcy filing can remain on your personal credit report for up to 10 years.
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, including applying for credit cards and loans, insurance applications and background checks for prospective employers. 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) and the Fair and Accurate Credit Transaction Act of 2003 - 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.
- Fair Credit Billing Act - The Fair Credit Billing Act protects consumers against unfair billing practices, such as unauthorized charges, charges for unaccepted or undelivered goods and services and other disputed charges made to a credit card or charge card.
If you have a complaint or issue with a financial product, service or organization or you believe your rights have been violated, there are things you can do. That includes reporting your complaints or issues to the Federal Trade Commission and the Consumer Financial Protection Bureau.
Truth in Lending Act
This Act requires lenders to provide written disclosures to borrowers about the terms and cost of consumer loans in a standardized 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. If you take out a mortgage, get a car loan or a personal loan, you should be provided with a copy of your rights under the Truth in Lending Act.
Other Consumer Protection Laws
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 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.
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.
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.
U.S. Courts. "Bankruptcy." Accessed February 26, 2020.
Department of Justice. "Equal Credit Opportunity Act." Accessed February 26, 2020.
Federal Trade Commission. "Fair Credit Reporting Act." Accessed February 26, 2020.
Federal Trade Commission. "Fair and Accurate Credit Transactions Act of 2003." Accessed February 26, 2020.
U.S. House. "Fair Credit and Charge Disclosure Act." Accessed February 26, 2020.
Federal Trade Commission. "Disputing Credit Card Charges." Accessed February 26, 2020.
Federal Trade Commission. "Consumer Leasing Act." Accessed February 26, 2020.
Federal Reserve Board. "Electronic Fund Transfer Act." Accessed February 26, 2020.
Federal Trade Commission. "Protecting Consumer Privacy and Security." Accessed February 26, 2020.