lissa's - a crash course in consumer law

7/27/2019 Lissa's - A Crash Course in Consumer Law

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A CRASH COURSE IN CONSUMER LAW
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College Students and Credit Cards

How Students Choose Their 1st Card: 38% Direct Postal Mail from Vendor

19% Referral From Parent

16% Applied Online 11% In Store Solicitation at Retail Outlet

7% Referral from a Friend

5% Vendor Booth/Table on Campus 3% Direct Email from Vendor


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The CARD Act of 2009

The Credit Card Accountability, Responsibilityand Disclosure Act of 2009

President Obama signed on May 22, 2009

Purpose of the act is to strengthen consumerprotections in the credit card market.

One focus of the act is to protect studentsfrom predatory credit card marketing.

Date of effectiveness: February 22, 2010(Some provisions August 22, 2010).


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What CARD Act prohibits Extension of credit to persons under 21 w/out

cosigner or independent means of repayment(proof of income)

On-campus gift marketing of credit cards (within

1000 ft. of campus) No credit card offers sent to consumers under 21

Retroactive rate increases

Over-limit fees for approved charges


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What CARD Requires

Credit card companies and colleges to disclose theirrelationships.

Clearer disclosure of credit terms

The limitation of fees and penalties on card holders (see

next slides) Any amount above minimum payment must be entirely

applied to highest-rate balance

Card issuers must consider consumers ability to makepayments before raising limits or issuing a new card.

Prohibits unreasonable due date practices Display on the statement how long it will take to pay off

the debt if only the minimum payment is made.


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Protection Against Rate

Increases Rates on existing balances can only be

increased if consumer is 60 days late in makinga required minimum payment

penalty rates must be reversed after sixmonths of on-time payments

promotional rates must last at least sixmonths;

and any rate increase must be reviewed atleast every six months


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Limitation on Penalties

Reasonable and proportional penalty fees

Over-the-limit opt-in (only allowed to go over

the limit if consumer agreed that the lendermay approve those transactions thatexceeded limit)

Limitation on number of over-the-limit fees(only one per billing cycle)


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Consequences of Credit Card Debt Increases total debt by graduation

Interest and fees on everyday purchases

Filing of lawsuits to collect

Stress of situation can affect academicperformance

Potential for identity theft

Harassment by Collection Agencies


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What is the FDCPA?

The Fair Debt Collection Practices Act(FDCPA) is a federal law providing residentsof all states with rights against abusive,unfair, and deceptive debt collectionpractices used by debt collectors.


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What is Debt?

Debt is any obligation or alleged obligation of aconsumer to pay money arising out of atransaction in which the money, property,insurance, or services which are the subject ofthe transaction are primarily for personal,family, or household purposes

15 U.S.C. 1692a(5)


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QUIZ 1

What is one of the things theCard Act prohibits?


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Who are we talking about?

Debtor: Someone who uses credit cards, owesmoney on a loan, or is paying on a home mortgage.

Creditor: A person or company that extends credit

creating debt, or to whom debt is owed. Debt Collector: Any person who regularly collects

debts owed to others. Generally a third-partycompany that collects debts on behalf of creditors,

which can include attorneys.


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Dont be an Ostrich!

If you fall behind in paying your creditors, oran error is made on your accounts, you maybe contacted by a debt collector.

BUT When you are contacted by a debt collector, the FDCPA

requires that you are treated fairly and also prohibitscertain methods of debt collection.

HOWEVER The law does not release you from any legitimate debt you

owe to a creditor.


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Debt Collectors Cannot Harass Consumers

A Debt Collector

MAY NOT:

Use threats ofviolence or harm

Publish a list ofconsumers who refuse

to pay their debts

(except to acredit bureau)

Use obscene orprofane language

Debt collectors may NOT contact you at inconvenienttimes or places.

- Presumption of inconvenience between the hours of 9pm and 8am.Calling during daytime sleeping hours is also inconvenient if the collector knows

you work at night.

- A debt collector may not call you at work if the collector has reason

to know that calls at work may be inconvenient or prohibited by employer.


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Debt Collectors Cannot be

Deceptive Debt collectors may not:

Collect an amount greater than your debt (subject to state law)

Attempt to collect on an invalid debt

Deposit a post-dated check prematurely

Use deceptive tactics to make you accept collect calls or pay fortelegrams

Take or threaten to take your property unless it can be donelegally

Threaten to take legal action unless they are legally entitled to do

so and are actually contemplating such action.


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Debt Collectors Cannot be

Misleading

Debt collectors may not:

Falsely imply that they are attorneys, law enforcement officers,or government representatives

Falsely imply that you have committed a crime

Falsely represent that they work for a credit bureau

Misrepresent the amount of your debt

Indicate that papers sent to you are legal forms when they arenot; or

Indicate that papers sent to you are not legal forms when theyare.


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Is there a way to get a debt

collector to stop calling?

Yes! But it requires a small amount of your timeand effort.

Write a letter to the debt collector that tells

them to stop contacting you. After the letter is received by the debt

collector, they cant contact you again unless: The contact is simply to tell you that there will be no further

contact, and; The contact is to notify you that the debt collector is going to

take some specific action against you.


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Are Companies Willing to Compromise

on the Amount of Debt You Owe?

Due to the state of the economy, debtcollectors are struggling to make money

Credit card companies are beginning torealize that some Americans will not be ableto pay their bills and are bracing themselvesfor a wave of defaults on credit card debt

Creditors often buy debts for pennies on thedollar and this can be used to negotiate alower settlement amount.


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What are your payment options?

Lump Sum: creditors may accept a lump sumpayment, even if it is less than the total debt,

just to make sure that some debt is repaid.

Payment Plan: creditors may be willing to setup an agreement with you that allows you topay off the debt over a period of time.


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What can you do if a debt

collector violates the Fair

Debt Collection Practices Act?

A debtor can sue a collector in state or federalcourt within one year of the violation. You can recover damages suffered, plus up to

$1000.

You can also recover your attorneys fees if youprevail in court.

Class Actions: Several debtors can sue the samedebt collector and recover damages up to$500,000, or one percent of the collectors networth, whichever is less.


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QUIZ 2

How do you stop debt collectorsfrom calling?


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Typical Credit Reporting Errors

Payments wrongfully marked late

Unknown accounts

Accounts listed twice Obsolete Information included

ID theft

Mixing Account Paid in full but still showing balance

due


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Disputing the Information on a

Credit Report Consumers must dispute incorrect

information with the CRA and the furnisherIN WRITING!!

Letters should be sent by certified mail,return receipt requested

Letter should include name, address, SSN,and DoB

Consumer should provide details as to whyinformation is incorrect and provide copies ofany supporting documentation.


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FCRA and Fraud Alerts

A CRA must add a Fraud Alert to anyconsumers credit report if requested. The Alert must be based on a good faith assertion

that the consumer has been a victim of fraud. Alert must remain on file for at least 90 days

These alerts may be extended by anyconsumer who provides an Identity TheftReport to the CRA These extended alerts remain on a file for 7 years


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QUIZ 3

What is one of the typical creditreporting errors?


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What is Bankruptcy?

FRESH START

Chapter 7

Chapter 13


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When Is the Right Time to

File?Personal circumstances

Type of debt

When debt was incurred What debt remains?


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Exempt property

Is someone going to come and take all my stuff?

Most of your personal items are exempt.

Exempt under the law means you are allowedto prevent the property from being sold to paycreditors.

If you have an asset of value, you have threeoptions:


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Option 1

Surrender the asset to the trustee who will sellit, pay you the value of the exemption, and giveyour creditors the remaining funds.

Example: you own car free and clear. Thevehicle is worth $3,000. You are single. Thus,you have an exemption of $2,150 in Oregon.

The vehicle has value to creditors of $850. Thetrustee will sell the car, pay you $2150 and paycreditors the $850.


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Option 2

Pay the trustee the amount creditors would getfrom sale and keep the asset.

Example: As before, the car has $3000 inequity. You would reach an agreement to paythe trustee the $850 over the exempt amount orsome negotiated lesser amount in exchange for

the right to keep your car.


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Option 3

Consider a Chapter 13 bankruptcy which is arepayment plan where you pay creditors aportion of the amount owed over a 3-5 yearperiod.


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General Process of Bankruptcy

Step 1: Gather all bills and documents and runcredit reports.

Step 2: File petition, pay filing fee ($299).

Trustee assigned and meeting of the creditorsset

Step 3: : Approximately 30 days after petition

date - meeting of the creditors held.


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General Process of Bankruptcy

Step 4: 60 days after first date set for meetingof the creditors is the deadline for objection todebtors discharge

Step 5: Discharge complete: 3-4 months afterpetition filed after report of no distribution filedby trustee; discharge entered. Vast majority of

Chapter 7 bankruptcies are declared no assetcases.


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QUIZ 4

When is it the right time to filebankruptcy?


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To learn more about the realities of

living on a low-income job and

play an interesting game, go towww.playspent.org

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