Know Your Rights: Consumer Protection Laws

Do lenders have to disclose all the terms of the loan in the contract? Does a debt collector have the right to call at 10 p.m.? Are you liable to pay unauthorized charges on a stolen debit card?

When problems arise, it helps to know if the law is on your side -- and what, if anything, you can do about your situation.

Fret not. Organized by problem type, this primer on consumer protection laws will guide you through the legal rights that apply to certain situations.

Primer on consumer protection laws

• Bankruptcy
• Consumer leasing
• Electronic fund transfer
• Credit
• Debt collection
• Homeownership

Bankruptcy

Law: Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, or BAPCPA, amends Truth in Lending Act

What it covers: Bankruptcy, debt counseling

What it does for consumers: The BACPA sets disclosure rules for repayment schedules and bankruptcy assistance services. Holds petition preparers, lawyers and debt relief agencies liable for fraud and negligence.

• Prohibits bankruptcy petition preparers from giving legal advice.
• Imposes heavy fines on bankruptcy petition preparers who violate the law or advise debtors to do something that breaks the law, such as supplying a bogus Social Security number on the petition.
• Bars debt relief agencies from misrepresenting or not following through on services offered to debtors.
• Requires debt relief agencies to give debtors notice of necessary documentation to file a bankruptcy petition. They must also include a separate statement titled, "IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER."
• Creditors must halt their collection efforts once a debtor files a petition for bankruptcy.
• Can enforce a 20 percent principal debt reduction on unsecured debts if the creditors refuse to negotiate a repayment plan with a credit counseling agency.
• Mandates that consumers who opt for repayment plans receive full disclosure of the repayment schedule and have some time to rethink the plan.
• Funds held in retirement plans and children's savings accounts are not considered as assets.
  
• Former spouses in bankruptcy can't discharge child support and alimony payments.

Consumers facing or considering bankruptcy should know that the law also makes filing for bankruptcy -- especially Chapter 7 -- more difficult and costly. For more information, read the Bankrate feature, "What is bankruptcy?"

To file a complaint about debtor education providers or credit counseling agencies, visit the U.S. Trustee Program's Web site.

Access the full text of the law here.

Consumer leasing

Law: Consumer Leasing Act of 1976 amends the Truth in Lending Act

What it covers: Auto leases and furniture rentals

What it does for consumers: When comparing long-term auto and furniture leases, this law makes sure the contract discloses important conditions and costs upfront. Leasing companies must abide by the rules.

• Covers personal property leases that exceed four months and contract for less than $25,000, regardless of any options for the consumer to buy the property at the end of the lease. Does not cover apartment leases.
• Regulates how leasing companies can advertise.
• Requires disclosure of total charges consumers will face at the beginning and end of a lease, as well as the monthly or periodic costs.
• Lease company must provide the consumer with a written disclosure of costs, including down payments, registration amounts or security deposits. The law also says they must spell out the terms and conditions of the contract, such as insurance requirements, the length of time the warranty remains in effect and damage covered under "wear and tear."
• Must provide a purchase-option statement, which explains whether the consumer will have the opportunity to purchase the property once the lease expires

For more information on consumer leasing, read the Bankrate feature, "Leasing laws you should know."

File a complaint about Consumer Leasing Act violations with the FTC.

Access the full text of the law here.

Electronic fund transfers

Law: Electronic Transfer Fund Act of 1978

What it covers: ATM, debit and credit card transactions, electronic payments

What it does for consumers: This law caps out-of-pocket expenses for consumers in cases where a thief charges up their debit, ATM or credit card, provided consumers meet time constraints. Consumers also have the right to dispute charges on their bank statement.

• Limits your liability to $50 if you report your credit card lost or stolen.
  
• Limits your liability to $50 if you report your debit card lost or stolen within two business days.
  
• After two days but within 60 days after you receive your statement, limits liability to $500. After 60 days, you could owe all fraudulent charges.
  
• Fraudulent signature-based purchases will only run you up to $50. If you report the missing or stolen card before someone uses it fraudulently, you shouldn't be liable for the charges.
  
• Liability periods should stretch if consumer had extreme circumstances that prevented prompt notification.
  
• If state law or issuer's terms and conditions provide lower liability limits, then the lower limits apply.
  
• Provides for a record of all electronic transfers in the form of receipts at ATMs or point-of-sale terminals and periodic bank statements showing all electronic transfers.
  
• If you find an error in a bank statement you can contact your bank and dispute charges. The bank generally has 10 business days to investigate your claim and report back to you, but may request more time. The consumer has 60 days from the date the statement was sent to report errors to the bank.
  
• ATMs that charge fees to process transactions must disclose the fee amount before the transaction completes.

If a bank is in violation of the ETF Act, try complaining to the bank first. Beyond that, you can file a complaint with the federal agency that regulates that bank.

Cards with predetermined values such as gift cards may not apply to the ETF Act.

Access the full text of the law here.


Credit

Credit Application

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.

Disclosure of Credit Terms 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.


Credit Report Access

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.


Credit Card Bills

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."

Access the full text of the law here.


Credit Card Accuracy


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.
Debt collection

Law: Fair Debt Collections Practices Act of 1977

What it covers: Debt collection procedures

What it does for consumers: It protects them from aggressive debt collectors. The law holds them to strict conduct rules.

• Debt collectors may not reach you at odd hours, such as before 8 a.m. or after 9 p.m., unless you grant permission for them to do so.
• Debt collectors may not contact you at work if they know your employer dislikes such calls.
• Debt collectors must go through your attorney, if you have one, in regard to your debt. They can only contact a third party once about where and how to find you.
• Consumers must receive written notice five days after first contacted by a debt collector. It must detail the amount owed and provide instructions on how to dispute the amount if the consumer believes it to be wrong.
• A collector may not contact you if within 30 days after you receive the written notice, you fire off a letter to the collection agency stating you do not owe the amount. However, a collector can resume collection procedures if they send proof of the debt, such as a copy of a bill for the amount owed.
• Collectors may not threaten harm, harass the debtor or third parties, make repeated calls to annoy the debtor or use profanity during the calls.
• Collectors may not misrepresent themselves as attorneys, government agents, credit bureau workers or any other entity other than debt collectors, nor may they lie about the amount owed or what will happen they don't receive payment.
• If you have a complaint, file it with the FTC and your state's attorney general.

For more information, read the Bankrate feature, "Debt collectors calling? Know your rights." If you want to dispute or negotiate a debt with a debt collector, use the form letters provided in the Bankrate feature "Form letters for debt collector problems."

If the debt owed involves unpaid federal taxes, read the Bankrate story "Overdue tax bill? A collection agency may call."

Access the full text of the law here.


Homeownership

Fee disclosure

Law: Home Ownership and Equity Protection Act, or HOEPA, of 1994 Amends the Truth in Lending Act

What it covers: Certain high-priced mortgage loans

What it does for consumers: Sets disclosure rules for lenders and shields consumers from predatory home equity lending.

• Covers first-lien mortgages that have an APR that's more than 8 percentage points above the comparable Treasury yield
• Covers second-lien mortgages that have an APR at least 10 percentage points above the rates on comparable Treasury notes
• Covers loans whose fees and points associated with closing cost the consumer at least $528 or 8 percent of the total loan amount
• Requires written disclosure to the consumer at least three business days before the loan is finalized
  -- Must disclose APR, payment amounts, loan amounts, balloon payment and maximum monthly payment for variable rate loans.
  -- Consumer must receive notice that he or she retains the right to not sign the loan agreement, despite having applied for the loan
  -- Written notice should be given that if the consumer fails to make mortgage payments, he or she may forfeit the house
  
• Borrower has three days to sign the loan
  
• Prohibits certain conditions of loans covered by HOEPA
  -- Most balloon payments
  -- Negative amortization
  -- Default interest rates that exceed interest rate prior to default
  -- Most prepayment penalties
  -- Ignore consumer's repayment ability and grant the loan based on the home's collateral value

For more information, visit the FTC's Web site.

If you have a complaint against a lender, you can submit it to the commission for nondepository lenders and to your state's attorney general. If you want to recover monetary loss from a lender in violation of the act, you'll need to contact an attorney.

Access the full text of the law here.


Demographic disclosure

Law: Home Mortgage Disclosure Act, or HMDA, of 1975

What it covers: loan application register information

What it does for consumers: It requires certain mortgage lenders and financial institutions in metropolitan areas to report demographic data on its mortgage borrowers and applicants and pricing information on high-priced loans to the government for the previous calendar year by March 1.

• Makes loan application register, or LAR, information available upon request
• Aggregate reports on HMDA-reporting lenders inside a metropolitan area also available
• Data reported includes loan originations, approval rates and loan applications that were denied, withdrawn or otherwise closed refinanced loans, home purchase loans and home improvement loans.
• Report should disclose loan type, loan purpose, loan amount, action taken on application, occupancy and applicant's sex, ethnicity, race and income. Institutions regulated by the Office of Thrift Supervision, or OTS, or the Office of the Comptroller of the Currency, or OCC, must report reasons for denial -- other lenders have the option to cite.
• Lenders must make their disclosure statements available to the public at their home office within three business days after the institution receives the report from the FFIEC
• Branch offices located in other MSAs may make their disclosure statements available within 10 business days of receiving it in at least one branch office in each MSA where they have offices or explain that disclosure statements are available upon written request to an address indicated in a public notice. These disclosure statements should arrive within 15 days after the lending institution receives a written consumer request.
• Can review reports online on the Federal Financial Institutions Examinations Council's Web site.

For more information or to order a report on an individual lender, go to the FFIEC Web site. Beginning with the 2005 disclosure and aggregate reports, reports obtained from the FFIEC Web site won't be available for paper copy or on CD-ROM. Reports from calendar year 1999 leading up to 2005 are available online for free. Consumers may also obtain reports from their lenders. To request reports from 1998 or earlier, go to http://www.ntis.gov.

Access the full text of the law here.


Abusive practices

Law: Real Estate Settlement Procedures Act, or RESPA, of 1974

What it covers: certain mortgage loans

What it does for consumers: It sets disclosure rules for closing costs and procedures and prohibits abusive practices.

• Applies to mortgage loans on a one-to-four family residential property.
• Lenders must provide a good faith estimate of settlement costs to applicants before the closing. Actual charges may differ.
• Requires lenders to issue a Mortgage Servicing Disclosure Statement, which declares who will service the loan
• Section 8 prohibits kickbacks and illegal markups
• Section 9 outlaws a requirement that the buyer purchase title insurance from a particular company
• Section 10 caps consumer payments into an escrow account. An annual account analysis should flag amounts over $50 and return them to the buyer.
• Allows borrowers to request the HUD-1 Settlement Statement, which details the finalized list of closing costs one day before closing
• Requires the lender or mortgage broker to provide Affiliated Business Arrangement Disclosure documentation if the consumer gets referred to a business with which the lender has a business relationship

Depending on the section violated and the timing of the grievance, you can file a complaint with the U.S. Department of Housing and Urban Development, your state's attorney general or insurance commissioner or file a lawsuit. For more about enforcing RESPA violations, visit the U.S. Department of Housing and Urban Development's Web site.

If you want to know more about what to expect before and during closing, read the Bankrate feature, "Understanding the closing process."

Access the full text of the law here.


Sources: The Federal Reserve, Federal Deposit Insurance Corp., Federal Financial Institutions Examinations Council, Federal Trade Commission, U.S. Department of Housing and Urban Development, Bankrate.com

Note: This chart is only intended to supply a brief overview of each consumer protection law and should be used as a reference guide for the laws listed. Not all consumer protection laws were included in this chart. Please refer to the Federal Reserve's Web site for information on other consumer laws.