PREVENTING ABUSESIN THE

CREDIT SYSTEM

Business Law II

Chapter 33Debtors, Creditors and Bankruptcy

Federal Equal CreditOpportunity Act

• Enacted October 1974

• Creditor may not refuse, on the basis of sex or marital status, to grant a separate account to a creditworthy applicant.

Federal Equal Credit Opportunity Act—continued

• A creditor may not ask the applicant’s marital status if the applicant applies for an unsecured separate account.

Federal Equal Credit Opportunity Act—continued

• A creditor may not prohibit a married female applicant from opening or maintaining an account in her maiden name.

Federal Equal Credit Opportunity Act—continued

• A creditor shall not request information about birth control practices, nor childbearing intentions, nor childbearing capabilities.

Federal Equal Credit Opportunity Act—continued

• Married persons with joint accounts have the right to have credit information reported in both names to provide credit history for both.

• In the past, upon divorce or upon death of the husband, the wife would often be denied credit because the joint account had been listed in the husband’s name only.

Federal Equal Credit Opportunity Act—concluded

• For more details, visit – www.ftc.gov/bcp/conline/pubs/credit/ecoa.htm

Federal Fair Debt Collection Practices Act

• Prohibited practices include:– Harassment of debtors (as with a

series of letters that contain menacing or threatening language, or with repeated telephone calls, especially at night)

Federal Fair Debt Collection Practices Act--continued

• Statute added to Consumer Credit Protection Act in 1978

• Prohibited practices include:– Abusive and profane language

Federal Fair Debt Collection Practices Act--continued

• Prohibited practices include:– Threats of violence

Federal Fair Debt Collection Practices Act--continued

• Prohibited practices include:– Contact with third parties (i.e.

relatives, neighbors, friends, and employers)

Federal Fair Debt Collection Practices Act--continued

• Prohibited practices include:– Communication with the debtor at

work

Federal Fair Debt Collection Practices Act--concluded

• For more information, visit– www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

Federal Fair CreditBilling Act

• Passed by Congress in 1974 to cover open-end credit accounts– Credit cards– Revolving charge accounts, etc.

Federal Fair CreditBilling Act--continued

• Creditors must mail bills at least 14 days before the due date;

• Must acknowledge billing inquiries within 30 days;

• Must settle any complaints within 90 days

Federal Fair CreditBilling Act--continued

• Creditors may not send repeated, insistent letters demanding payment until disputes over the billing are settled

Federal Fair CreditBilling Act--continued

• Credit card holders may withhold payment for items that prove defective without being held liable for the entire amount owed. Applies only for purchases of more than $50 made in the buyer’s state or within 100 miles of the buyer’s home.

Federal Fair CreditBilling Act--concluded

• For more information, visit– www.ftc.gov/bcp/conline/pubs/credit/fcb.htm

Consumer Leasing Act

• Passed by Congress in 1976– Legislation that requires lessors to disclose

specific financial information about the terms of a lease, such as the monthly payment, the total amount of payments, and the allowance for a trade-in.

Consumer Leasing Act-- continued

– The act also requires lessors to give an estimated value of the property, typically a car, at the end of the lease period.

Federal Fair CreditReporting Act

• Regulates companies which review credit applicants

• Became law in 1970, but has been amended multiple times since

• Dictates how information can be collected, distributed, and used

Credit RepairOrganizations Act

• April 1997

• Regulates companies that help consumers “repair” their credit histories

• For more information, visit– http://www.fdic.gov/news/news/financial/

2006/fil06031.pdf

Federal Truth in Lending Act

• Part of the Consumer Credit Protection Act of 1968

• Requires full disclosure of interest and finance charges

• For more information, visit– http://www.fdic.gov/regulations/laws/rules/

6500-200.html

Report all suspicious contacts to the Federal Trade Commission

through the Internet at www.consumer.gov/idtheft

or by calling 1-877-IDTHEFT.