Chapter 5: Consumer Rights and Responsibilities

When you use credit, you enter into a contract – the financial institution lends you money with specific terms, and you agree to repay it under those terms. Therefore, as a borrower, you have both rights and responsibilities.

Federal Law
The Federal Trade Commission (FTC) enforces these rules. Any violation should be reported to the FTC at www.ftc.gov, 202-326-2222.

Truth in Lending Act (TILA)
The TILA requires credit issuers to disclose the following:

• The monthly finance charge, annual interest rate, and any late or penalty fees that may be imposed.
• Written itemization of the amount borrowed and the total amount of the loan, including interest and fees, and the number, amount, and due dates of all payments necessary to repay the loan.
  

Fair Credit Billing Act (FCBA)
The FCBA offers the following protections under the law:

• Liability for lost or stolen credit cards is limited to $50 if you notify the card issuer within 30 days.
• If you purchase a defective item or substandard service by credit card, the payment can be withheld if the seller refuses to replace, repair or otherwise correct the problem.
• If there has been an error in a credit card bill the lender must correct it, or explain why the amount is believed correct, within 90 days after being notified.

Fair Debt Collections Practices Act
The Fair Debt Collection Practices Act (FDCPA) regulates collection agencies’ conduct, and specifically prohibits such action as:

• Calling before 8am or after 9pm, or at any inconvenient time.
• Calling you at work if you have informed the collector that the calls are jeopardizing your job.
• Discussing your debt with a third party other than your spouse without your permission, except to leave a message that he is trying to contact you.
• Using profanity.
• Misrepresenting himself. For example, he cannot say he is an attorney if he is not.
• Collectors cannot make false threats. If a collector says he is going to take a specific action against you to enforce the debt, he has to do it.

Debt and lawsuits
A creditor or collector cannot take any wages, money, or property without first suing you in court, winning, and then obtaining a judgment. Also, be aware that in most instances you cannot go to jail for non-payment of unsecured debt, even if you have lost a lawsuit.

State Law
You may also have additional rights under state law. Check with your state’s Office of the Attorney General for more information. To locate your Attorney General, contact the National Association of Attorneys General at www.naag.org.