Federal Statutes Relating To Consumer Protection

There are numerous federal laws which are intended to protect consumers in credit and other financial matters. The Federal Reserve is in charge of implementing many of these laws which ensure that consumers are given comprehensive information and are treated fairly.

Many of the important statutes related to consumer protection are discussed below. It is important to know your rights under the law. Well-educated consumers are the best consumer protection available in the marketplace. When you know and understand your rights and responsibilities, you can then use this information when you shop and compare products.

We’ve taken the most important statutes related to consumer finance and have listed them below.

Truth in Lending Act (15U.S.C.§§1601-1667f, as amended)

This Act (TitleI of the Consumer Credit Protection Act) vests the Commission with responsibility for assuring compliance by most non-depository entities with a variety of statutory provisions. Specifically, the Act requires all creditors who deal with consumers to make certain written disclosures concerning all finance charges and related aspects of credit transactions (including disclosing an annual percentage rate). The Act also establishes a three-day right of rescission in certain transactions involving the establishment of a security interest in the consumer's residence (with certain exclusions, such as interests taken in connection with the purchase or initial construction of a dwelling). The Act also establishes certain requirements for advertisers of credit terms. A number of later laws (see below) made substantial amendments to this Act.

This Act, amending the Truth in Lending Act, requires prompt written acknowledgment of consumer billing complaints and investigation of billing errors by creditors. The amendment prohibits creditors from taking actions that adversely affect the consumer's credit standing until an investigation is completed, and affords other protection during disputes. The amendment also requires that creditors promptly post payments to the consumer's account and either refund overpayments or credit them to the consumer's account.

Fair Credit Reporting Act (15U.S.C.§§1681-1681u, as amended)

The Act protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. Also, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports. Further, users must identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer. The Red Flag Program Clarification Act of 2010 (Pub. L. 111-319, 124 Stat. 3457) clarifies and narrows the meaning of “creditor” for purposes of the Red Flags provisions.

The Fair and Accurate Credit Transactions Act, the Credit CARD Act and Dodd-Frank Act (see below), made a number of substantial changes to this Act.

Fair Credit and Charge Card Disclosure Act (codified in scattered sections of the U.S. Code, particularly 15 U.S.C. 1637(c)-(g))
This Act, amending the Truth in Lending Act, requires credit and charge card issuers to provide certain disclosures in direct mail, telephone and other applications and solicitations to open-end credit and charge accounts and under other circumstances.

Fair Credit Billing Act (15 U.S.C. 1666-1666j)

This Act, amending the Truth in Lending Act, requires prompt written acknowledgment of consumer billing complaints and investigation of billing errors by creditors. The amendment prohibits creditors from taking actions that adversely affect the consumer's credit standing until an investigation is completed, and affords other protection during disputes. The amendment also requires that creditors promptly post payments to the consumer's account, and either refund overpayments or credit them to the consumer's account.

Fair Credit and Charge Card Disclosure Act (codified in scattered sections of the U.S. Code, particularly 15 U.S.C. 1637(c)-(g))

This Act, amending the Truth in Lending Act, requires credit and charge card issuers to provide certain disclosures in direct mail, telephone and other applications and solicitations to open-end credit and charge accounts and under other circumstances.

Equal Credit Opportunity Act (15U.S.C.§§1691-1691f, as amended)

This Act (TitleVII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act. The Act also requires creditors to provide applicants, upon request, with the reasons underlying decisions to deny credit.

Fair Debt Collection Practices Act (15 U.S.C.§§1692-1692o, as amended)

Under this Act (Title VIII of the Consumer Credit Protection Act), third-party debt collectors are prohibited from employing deceptive or abusive conduct in the collection of consumer debts incurred for personal, family, or household purposes. Such collectors may not, for example, contact debtors at odd hours, subject them to repeated telephone calls, threaten legal action that is not actually contemplated, or reveal to other persons the existence of debts.

Electronic Fund Transfer Act (15U.S.C.§§1693-1693r, as amended)

This statute (TitleIX of the Consumer Credit Protection Act) establishes the rights, liabilities, and responsibilities of participants in electronic fund transfer systems. The Act requires financial institutions to adopt certain practices respecting such matters as transaction accounting, preauthorized transfers, and error resolution, and sets liability limits for losses caused by unauthorized transfers. The Credit CARD Act and the Dodd-Frank Act (see below) made substantial amendments to this Act.

Home Equity Loan Consumer Protection Act (in scattered sections of the U.S. Code, particularly 15 U.S.C. §§1637 and 1647)

This Act, amending the Truth in Lending Act, requires creditors to provide certain disclosures for open-end credit plans secured by the consumer's dwelling and imposes substantive limitations on such plans.

Home Ownership and Equity Protection Act (15 U.S.C. §1639, as amended)

The Act, amending the Truth in Lending Act, establishes disclosure requirements and prohibits equity stripping and other abusive practices in connection with high-cost mortgages. The Dodd-Frank Act (see below) made substantial amendments to this Act.

Credit Repair Organizations Act (15 U.S.C. §§1679-1679j)

This Act, Pub. L. No. 104-208, § 2451, 110 Stat. 3009-455 (Sept. 30, 1996), amending title IV of the Consumer Credit Protection Act, prohibits untrue or misleading representations and requires certain affirmative disclosures in the offering or sale of "credit repair" services. The Act bars "credit repair" companies from demanding advance payment, requires that "credit repair" contracts be in writing, and gives consumers certain contract cancellation rights.

Dodd-Frank Wall Street Reform and Consumer Protection Act, Titles X and XIV (Pub. L. 111-203, 124 Stat. 1376)

Title X of this Act creates a new Bureau of Consumer Financial Protection within the Federal Reserve Board as a new supervisor for certain financial firms and as a rulemaker and enforcer against unfair, deceptive, abusive, or otherwise prohibited practices relating to most consumer financial products or services. The Act preserves most of the FTC’s authority over financial practices, transferring most of its rulemaking and some reporting responsibilities under specified consumer financial laws to the Bureau, and providing for FTC/Bureau coordination regarding certain rulemaking and enforcement activities. The Act provides authority for each agency to enforce some of the other’s rules with respect to consumer financial practices. The Act also authorizes FTC rulemaking for motor vehicle dealers under standard Administrative Procedure Act procedures rather than the procedures set forth in the FTC Act. In addition, the Act amends the Electronic Fund Transfer Act to provide for limitations on interchange transaction fees and on the constraints that credit and debit card networks may impose on retailers, and to provide standards for remittance fee practices. It amends the Fair Credit Reporting Act to require the provision of credit scores to consumers in connection with denials or less favorable offers of credit. It also provides for improved financial disclosures, including integration of mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act.

Title XIV of the Act amends the Truth in Lending Act and other consumer financial laws to prevent mortgage-related abuses and to ensure availability of responsible, affordable mortgage credit. It addresses compensation-based incentives; inappropriate steering, discrimination, and other abusive, unfair, deceptive or predatory practices; minimum federal lending standards; high-cost mortgages; mortgage servicing; and appraisals. Title XIV provides a new enforcement role for the FTC regarding home appraisals.