Credit and Your Consumer Rights

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Personal debt and credit accounts underwent a revolution beginning in the late 1960s. As account information became computerized and standardized, lawmakers attempted to fill the holes left in consumer rights.

Beginning with the Consumer Credit Protection Act, new protections were established for consumers and their financial records. Among these were the Right to Financial Privacy Act, the Credit Practices Rule and the Expedited Funds Availability Act.

Right to Financial Privacy Act

The Right to Financial Privacy Act was passed in 1978 to limit government access to personal financial records. In most cases, a government agency must follow a specific protocol to see your financial records — your written consent, a subpoena or a search warrant is required.

There are some exceptions to this rule:
  • Under specific circumstances, you may not be asked or told ahead of time that a government agency is viewing your files.
  • A bank or other financial institution has the right to notify police if it has information about illegal activity.
  • Your bank has the right to submit copies of your financial records to a court in order to prove a bankruptcy claim or attempt to collect a debt.
  • A financial institution also may release your records if it removes all personal identifying information.

The law does not apply if a supervisory or consumer rights agency needs records to research consumer complaints. In these instances, the records are used to scrutinize the financial institution and not you.

Credit Practices Rule

The Credit Practices Rule was established in 1985 to protect the rights of consumers in debt. It applies to consumer-credit contracts made with creditors such as car dealers, department stores and financing companies. It does not apply to real estate purchases, bank loans or contracts with loan associations.

Here are a few of its provisions:
  • Under the Credit Practices Rule, creditors cannot make you give up your right to be notified of a court hearing.  If you are sued for not paying a debt, this ensures that you know about the hearing.
  • Creditors cannot require you to give up rights that protect certain personal belongings. In most states, if you fail to pay your debt, you are still entitled to keep your home, clothing and other personal items.
  • Creditors also cannot require you to use personal or sentimental items as collateral. This includes wedding rings, pets, linens, documents and other household items.
  • Some creditors may want you to agree to have money automatically deducted from your paychecks if you fall behind on loan or debt payments. Creditors are allowed to offer this option only under the condition that you can cancel automatic deductions at any time.
  • Creditors have the right to charge a late fee if your loan payment is late. But they are banned from implementing a practice known as pyramiding late fees. If you make your usual payment on time but fail to include the owed late fee, the creditor cannot charge you an additional late fee.

Expedited Funds Availability Act

The Expedited Funds Availability Act, passed in 1987 and amended in 2010, limits the time between when you deposit funds into your account and when those funds become available for use.

A 2010 amendment to the act detailed when certain amounts of a deposit are available to an account holder.

When you deposit cash, electronic funds and some checks, you will be able to access and withdraw these funds on the business day following the day the deposit is received.

So, if you deposit money into your account on Monday, the funds must be available to you by Tuesday. If you made the deposit over the weekend, the bank will receive it Monday and must make the funds available by Tuesday.

For personal checks or checks over $100, the wait time may increase. Depending on the check type and amount, the wait may be three to five business days.

Longer delays are allowed in several circumstances, such as in cases of check deposits totaling more than $5,000 on a single day, for new accounts, and for accounts with a recent history of overdrafts.

Other Consumer Protections

These are just a few of the provisions relating to consumer financial rights. The Consumer Credit Protection Act, for example, deals with credit reports and other aspects of debt and credit. To learn more about your credit and consumer rights, visit the Federal Trade Commission’s website.

Al Krulick

Al is an award-winning journalist with dozens of years of writing experience. He served as a drama critic, high school teacher, arts administrator, theatrical producer and director. He also dabbled in politics, running twice for a seat on the U.S. House of Representatives for Florida. Al is a Certified Debt Specialist with the International Association of Professional Debt Arbitrators and specializes in real estate, credit and bankruptcy advice.

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