consumer protection laws dino tsibouris (614) 360-1160 dino@tsibouris.com

Consumer Protection Laws

Dino Tsibouris(614) 360-1160

dino@tsibouris.com

Gramm-Leach-Bliley

• Consumer financial information privacy law• “GLB Act”• Applies to “financial institutions” – any

businesses significantly engaged in financial activities such as lending

Gramm-Leach-Bliley

• The FTC ruled that GLB applies to higher education if it offers financial aid

• Imposes duties beyond FERPA• GLB Act led to creation of the Privacy Rule and

the Security Rule

Gramm-Leach-Bliley

• Protects information about:–Anyone who receives a financial service

from the school and provides non-public financial information about themselves– Includes students, parents, faculty, staff and

other third parties with whom the university interacts

Gramm-Leach-Bliley

• GLB Privacy Rule⁻ Must give notice of privacy practices/right to opt-out of

sharing of information with third parties⁻ FERPA compliance deemed GLB Privacy Rule compliance⁻ Any institution of higher education that complies with

the Federal Educational Rights and Privacy Act ("FERPA"), 20 U.S.C. 1232g, and its implementing regulations, 34 CFR part 99, and that is also a financial institution subject to the requirements of this part, shall be deemed to be in compliance with this part if it is in compliance with FERPA. - 16 CFR 313.1

Gramm-Leach-Bliley

• GLB Security Rule ⁻ Rules on Safeguarding Customer

Information⁻ 67 Fed. Reg. 36484 (May 23, 2002) ⁻ No exemption for educational institutions⁻ Must develop/maintain an information

security program

Gramm-Leach-Bliley

• Information Security Plan should:– Identify and assess risk to customer information– Design/implement written safeguard program– Respond to incidents– Proactively respond to vulnerabilities– Monitor/adjust– Require vendors to comply

Gramm-Leach-Bliley

• Information to protect:– Social security numbers – Credit card numbers – Bank account numbers – Account balances – Credit history or rating – Tax return information

The Equal Credit Opportunity Act

• 15 USC § 1691• Prohibits credit discrimination on the basis of

race, color, religion, national origin, sex, marital status, age, or because you get public assistance

The Equal Credit Opportunity Act

• 1691a(e)“Creditor” means any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit

The Equal Credit Opportunity Act

• 1691(a) Activities constituting discrimination • Unlawful for any creditor to discriminate

against any applicant— 1. on the basis of race, color, religion, national origin, sex or

marital status, or age (provided the applicant has the capacity to contract);

2. because all or part of the applicant’s income derives from any public assistance program; or

3. because the applicant has in good faith exercised any right under this chapter.

The Equal Credit Opportunity Act

• 1691(b) Activities not constituting discrimination – Asking about marital status to ascertain the creditor’s rights and

remedies applicable to the particular extension of credit– Asking the applicant’s age or whether the applicant’s income

derives from any public assistance program for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of credit-worthiness

– Using an empirically derived credit system which considers age if such system is demonstrably and statistically sound

– To ask or consider the age of an elderly applicant if it will be used in favor of such applicant

The Equal Credit Opportunity Act• When Deciding To Grant You Credit Or When Setting The Terms Of

Credit, Creditors May Not...• Consider your race, color, religion, national origin, sex, marital status or

whether you get public assistance. • Consider your age, unless:

– you’re too young to sign contracts, generally under 18; – it’s used to determine the meaning of other factors important to

creditworthiness. For example, a creditor could use your age to determine if your income might drop because you’re about to retire;

• Consider whether you have a telephone account in your name. A creditor may consider whether you have a phone.

Lender Licensing

• Many states require a person to obtain a license to make a consumer loan

• Substantial penalties for failure to comply• Limited exceptions to licensure

Small Loan Statutes

• Ohio Revised Code 1321.01• A person wishing to engage in the business of

lending in amounts of five thousand dollars or less and charging a rate greater than eight percent must first be licensed

Small Loan Statutes

• Ohio Revised Code 1321.01• “Person” includes individuals, partnerships,

associations, trusts, corporations, and all other legal entities

Small Loan Statutes

• Ohio Revised Code 1321.01• Excludes:–Banks, Second Mortgage Loan Licensees– Insurance companies

• Any licensee or other person who willfully violates section 1321.13 of the Revised Code shall forfeit to the borrower twice the amount of interest contracted for

Small Loan Statutes

• Ohio Revised Code 1321.13 limits interest, fees, and charges– Maximum interest rates– Required order of application of payments– No compounding – Many, many more…

Small Loan Statutes

• Ohio Revised Code 1321.13 limits interest, fees, and charges– Maximum interest rates– Required order of application of payments– No compounding – Many, many more…

Small Loan Statutes

• Ohio Revised Code 1321.01• Violations:– 5th degree felony– Administrative fines and civil penalties

Questions & Answers

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