Federal Acts That Protect Consumers

Using credit has become an integral part of our daily lives. Rather than carry a wallet full of cash, people now carry a wallet full of credit cards. Unfortunately, along with the benefits of credit card use, such as instant access and ready money, come the downfalls, such as bad credit, overcharges, inaccurate information, and inappropriate practices.

Quite often, consumers may find themselves with a situation that requires correction. Initially, the consumer should attempt to rectify the situation by contacting the agency or business that is involved. If this does not solve the dilemma, the consumer should move on and file a complaint with the Federal Agency responsible for that particular type of credit problem.



Enforced and formulated by the FTC , or Federal Trade Commission, several different acts or laws are available to assist the consumer in their quest for accuracy and fairness. Review each of these acts and discover what rights they protect and what penalties they incur.

Equal Credit Opportunity Act

The primary purpose of the Equal Credit Opportunity Act, ECOA, is to guarantee that all individuals are given an equal opportunity to acquire credit by creditors. This does not guarantee that they will receive the credit, since that depends on outside factors such as, expenses, income, debt levels, and credit history. Creditors include banks, credit card companies, department store companies, retail stores, credit unions, and small loan and finance companies.

This act protects individuals from being discriminated against by creditors. If an individual thinks that they have been discriminated against in some way, this act allows him or her to sue for actual damages. Moreover, the consumer can also sue for punitive damages. If the suit is decided in the consumer's favor, court costs, as well as, a reasonable fee for the attorney will be awarded to the consumer. Class action suits are permitted.

Truth In Lending and Consumer Leasing Acts

The Truth In Lending and Consumer Leasing Acts require creditors to disclose accurate information, to follow all of the rules for credit cards, and to comply with the right to cancel specific home-secured loans. Consumers may sue for actual damages and any loss incurred resulting from the actions of an institution failing to follow these rules. Class action suits are allowed.

Electronic Fund Transfer Act

The Electronic Fund Transfer Act, EFTA, applies to ATM transactions, debit card transactions, electronic check conversions, and direct deposits and withdrawals. Store valued cards, phone cards, mass transit cards, and gift cards may not be covered under this act.

Consumers may sue an institution for actual damages, as well as, punitive damages if the institution fails to follow the rules set up under this act. Under this act, the consumer is also entitled to court costs and attorney fees. In some cases, the consumer may sue for all damages that result due to an institution's failure to comply with the rules, such as failure to make an electronic fund transfer or to stop a payment as requested by the consumer. Class action suits are permissible.

Fair Credit Billing Act

The purpose of the Fair Credit Billing Act, FCBA, is to prompt creditors to post payments in a timely fashion and to promote the prompt correction of billing mistakes. Creditors who fail to follow the rules for prompt correction of billing errors will forfeit the amount, as well as, any finance charges, that are owed on the item. It also allows consumers to sue for actual damages, double the amount of the finance charge, and court and attorney costs.

The FCBA only applies to open-ended credit accounts, such as credit card accounts and revolving charge accounts. This act does not apply to installment loans, such as car loans, furniture loans, and appliance loans. It does, however, cover duplicate charges, charges for merchandise that was not received, incorrect numerical amounts, and unauthorized charges. Class action suits are allowable.

Fair Credit Reporting Act

The dual purpose of the Fair Credit Reporting Act, FCRA, is to protect the privacy of the consumer and to promote the accuracy of the information that is contained within the consumer reports compiled by the credit reporting agencies. Under this law, the credit reporting agencies and the businesses supplying information to the agencies must follow strict guidelines. The credit reporting agencies must follow the rules set forth under this law regarding who may have access to your credit records. Furthermore, the rules concerning the correction of billing errors in the consumer's files fall under this law.

Consumer rights under this law include the right to sue any credit reporting agency or creditor that breaks any of the rules of this act. In addition to seeking actual damages, the consumer may sue for punitive damages should the court find the violations were intentional. Court costs and attorney fees will be awarded to the consumer should he win the case. The penalty that may be given to an individually who unlawfully gives away or receives a consumer's credit report includes a fine up to $5,000, a one year imprisonment term, and/or both.