What to Know About Consumer Credit Repair Laws

The consumer credit repair laws in the United States are not usually written in such a way that the average consumer can understand them. But then again, there are not many laws, consumer-related or not, that are easily understood by someone without a law degree.

The following is an overview of the most common laws pertaining to consumer rights protection. These are the bare basics of what the average consumer should know. This is not an official legal interpretation of these laws, but instead a set of basic facts meant to assist the average consumer in understanding his or her rights.

Fair Credit Reporting Act (FCRA) 15 U.S.C. § 1681

Originally signed into law in 1970, FCRA guarantees the confidential, accurate, relevant, and proper handling of the consumer information collected and recorded by credit bureaus. It also gives consumers the right to request a copy of their credit report, and credit scores (a numerical representation of your credit “worthiness”). The only legally authorized provider of your free credit report is AnnualCreditReport.com.

This law also requires the credit bureaus to investigate written disputes within 30 days and remove any inaccurate or unverifiable information and keep that information from reappearing on your report. Under the FCRA, the consumer has to be told if the information in their credit report was used against them. Examples include if a consumer was denied credit, insurance, or employment due to information found in a credit report.

Each state is required to enforce the FCRA and in many states consumers are protected by additional credit reporting laws. If you would like more information on FCRA, check out www.ftc.gov.

Fair Debt Collection Practices Act (FDCPA)

The FDCPA was enacted in 1977 [15 USCS §§ 1692 et seq.] to “eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.”

This law prohibits several activities that are considered as deceptive or harmful to consumers (lying, harassing, misleading, abusing, etc.), as well as requiring a number of helpful activities. FDCPA is enforced by the Federal Trade Commission, which reports to Congress annually regarding any issues involving this law.

According to FDCPA, a debt collector is “any person who uses any instrumentality of interstate commerce or the mails in any business the principle purpose of which is the collection of any debts” § 1692a(6). This actually excludes the original creditor, which means the rules of FDCPA do not apply to the company that extended the original line of credit. This law only applies to collection companies hired or contracted by the original creditor.

Under FDCPA, debt collectors that fail to comply with this law are liable to the debtor (consumer, i.e. you) for an amount not to exceed $1,000. Unfortunately, because this amount is so low, it doesn’t act as a strong enough deterrent for collection companies and many of them knowingly violate this law under the presumption that income from successfully collected accounts will far outweigh FDCPA fines.

For more information on the Fair Debt Collection Practices Act, see http://www.ftc.gov/os/statutes/fdcpajump.shtm

Credit Card Accountability Responsibility and Disclosure Act

This is the most current consumer credit law and was enacted on May 22, 2009. It amends the Truth in Lending Act, the Federal Trade Commission Act and the Electronic Funds Transfer Act.

This bill is very comprehensive and we suggest reading about it at Credit.com. It includes new rules about annual percentage rate increases, fees and finance charges, double billing cycles, over limit fees, fixed rates, statement delivery and due dates and various other payment rules.

The basic reason for this bill is to increase transparency within the credit card industry. This bill will make it more difficult for creditors to hide fees in fine print and raise your APR without you knowing about it well in advance. The bill is designed to protect consumers from predatory creditors.

Most consumer credit laws are regulated by the Federal Trade Commission and more information can be found on their website. Also, check out www.credit.com, where you can find articles written about credit and your legal rights as a consumer.