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Consumer protection laws: Know your rights

Primer on consumer protection laws

Law: Equal Credit Opportunity Act of 1974, or ECOA

What it covers: Discrimination in lending

What it does for consumers: The law protects consumers from discriminatory lenders. Applicants cannot be denied credit based on race or marital status alone, for instance. It also establishes right-to-know provisions for consumers.

  • Distinguishes between discriminatory and legitimate questions to the consumer.
  • Lender cannot ask about the applicant's plans to have children; nor ask if the consumer is widowed or divorced.
  • Lenders may not assign different terms and conditions to a consumer based on discriminatory factors alone.
  • Lenders may ask you to voluntarily reveal mentioned discriminatory factors such as sex and race for real estate loans.
  • Consumers need not have a co-signer if they qualify on their own for credit.
  • Applicants may have a co-signer who is not a spouse.
  • Lenders must notify consumers if their application was approved or denied within 30 days.
  • Lenders either must provide a denial reason or inform applicants of their right to find out within 60 days.
  • Gives consumers right to request why they were approved for different terms, such as a higher APR.

For more information on the law and how to file a complaint against a creditor, go to the Federal Trade Commission's Web site.

Access the full text of the law here.

Law: The Truth in Lending Act of 1968

What it covers: Credit transactions

What it does for consumers: The law takes the mystery out of fees. Sets disclosure rules for credit agreements, requiring lenders to divulge certain fees, how their amounts will be calculated and certain terms and conditions so that consumers may compare credit offers.

  • Requires issuers to define how an APR is calculated.
  • Lenders must disclose and define certain fees and terms, including the APR, finance charges, grace period, credit line, minimum payment, annual fees and fees for credit insurance, if applicable.
  • Costs to the consumer associated with closing must exceed $528 to trigger disclosure requirements.
  • Gives consumers a three-day right of rescission period for certain real estate loans. During that time no loan activities should take place.
  • Requires the lender or mortgage broker to provide Affiliated Business Arrangement, or AfBA, Disclosure documentation if the consumer gets referred to a business with which the lender has a business relationship.
  • Requires lenders to issue a Mortgage Servicing Disclosure Statement, which declares who will service the loan.

For more information, read the Bankrate feature "Other lender paperwork."

Access the full text of the law here.

Law: The Fair and Accurate Credit Transaction Act of 2003, or FACT Act

What it covers: Credit reports, fraud alerts, credit scores

What it does for consumers: Offers a proactive way to prevent identity theft by giving consumers the right to check each of their credit reports at no charge every 12 months. Allows access to credit scores and the right to place a free fraud alert on credit reports.

  • Entitles consumers to one free credit report every 12 months from each of the nationwide credit bureaus -- Experian, Equifax and TransUnion.
  • Beyond the free report from each credit bureau every 12 months, the law extends free credit reports to those in extenuating circumstances, such as consumers receiving public assistance, victims of fraud and those who have been denied credit or insurance within 60 days. (Residents of Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont may also be due an additional free report -- two, in Georgia's case.)
  • Gives consumers suspicious of identity theft the right to place a fraud alert on their credit reports. Once a consumer requests a fraud alert with one credit bureau, that agency should notify and set alerts at the other two nationwide credit bureaus.
  • Allows consumers to purchase their credit score. Law requires explanation of how it was calculated.

For more information, read the Bankrate feature, "How to get your free credit report."

Access the full text of the law here.

Law: The Fair Credit Billing Act of 1974

What it covers: Credit card billing errors

What it does for consumers: Consumers don't have to accept credit card billing charges they don't deserve. The law gives them the right to fight billing errors and withhold payment for unacceptable services or merchandise.

  • Amends the Truth in Lending Act
  • Lets consumers dispute charges to their credit card accounts, withhold payment or request a refund for billing mistakes. If the consumer finds a purchase unsatisfactory, he or she may also dispute the charges within 60 days after receiving a billing statement containing an error.
  • Defines billing errors, which include not crediting payments made by the consumer to the company, unauthorized charges and math mistakes.
  • Requires lenders to send customers a written acknowledgeable of a billing error dispute within 30 days after receiving it from the consumer. They must resolve the dispute within two billing cycles and not take longer than 90 days.

For more information, read the Bankrate feature "Fair Credit Billing Act and your rights."

To dispute a credit card charge, submit your complaint in writing, certified mail with return receipt requested, to the card issuer by using this sample letter. For a PDF version of the letter, click here. For a .txt format, click here.

Access the full text of the law here.

Law: Fair Credit Reporting Act of 1970

What it covers: Errors on credit reports

What it does for consumers: The law allows for the correction or deletion of inaccurate, outdated or unverifiable information, provided that a reinvestigation into the disputed data sides in the consumer's favor.

  • Allows consumers to request their credit reports and scores.
  • Grants consumers the right to dispute unverifiable, inaccurate, incomplete or outdated negative information. Most negative data must fall off after seven years. Credit reporting agencies must purge or correct inaccurate, incomplete or unverifiable data within 30 days to 45 days after receiving your dispute.
  • Restricts third parties from access to your credit report to a select few and requires the consumer's permission for employer access
  • Allows consumers to opt-out of unsolicited credit and insurance offers for at least five years by calling (888) 567-8688.

File a dispute with each of the credit reporting agencies whose credit report contains inaccuracies. Experian, Equifax and TransUnion allow you to do so online. If the dispute involves a particular creditor, try contacting the lender first. Regardless of who conducts and resolves the investigation, check your credit report again to be sure the errors came off your report. If you're applying for a loan during an investigation, notify the lender about the disputed data.

If the outcome of the investigation doesn't side in your favor, you have several courses of action. You can place a 100-word consumer statement on your credit report that defends your point of view. You may also file a complaint with your state's attorney general or the Federal Trade Commission in Washington at (202) FTC-HELP. (Note: Negative but accurate information must remain on your credit report.)

Beyond that, you'll have to sue the creditor or credit reporting agency. Consult with an attorney about your options.

Access the full text of the law here.




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