What are the Federal Consumer Credit Laws?

Numerous state and federal laws apply to consumer credit transactions. If your company provides credit to consumers, you must comply with these laws. Below you will find a list of the main federal laws.

Consult with your attorney about these laws before granting credit to consumers and about any state laws that may apply, such as usury laws. Use laws set limits on the interest rate you can charge a consumer. Some also limit late fees and other fees.

  • The Credit Practices Rule – The Credit Practices Rule applies to consumer credit agreements offered by financial and retail companies for any personal purpose except to purchase real estate. It prohibits creditors from including certain provisions (such as wage assignments and waivers of the exemption) in consumer credit agreements, and requires written notice to consumers before they sign obligations for others.
  • The Equal Credit Opportunity Law – The Equal Credit Opportunity Act prohibits discrimination on the basis of race, color, religion, national origin, age, sex, or marital status. A business considering whether or not to extend credit is free to consider the usual factors for extending credit, such as the applicant’s financial situation and credit history.
  • The Fair Credit Billing Law. The Fair Credit Billing Act generally only applies to billing errors related to “open” credit. Examples of billing errors are charges that list the wrong date or amount, charges for goods or services that were not delivered as agreed, mathematical errors, failure to send payments, failure to send invoices to the address current customer and the charges for which the customer has requested an explanation. The act requires a creditor to take certain actions when a customer claims that the creditor made a mistake in billing them.
  • The Fair Credit Reporting Act – The Fair Credit Reporting Act protects consumers by requiring that inaccurate or outdated credit reporting information be removed from a credit report. It applies to credit reporting agencies and companies that provide information to credit reporting agencies and those that use consumer reports. Business owners are responsible for correcting inaccurate or incomplete information on a credit report.
  • The Fair Debt Collection Practices Act – The Fair Debt Collection Practices Act protects consumers by prohibiting debt collectors from taking certain actions when collecting a debt. Personal, family and domestic debts are covered by law. Prohibited actions include using threats of violence or harm, using false statements, or contacting the consumer before 8:00 a.m. or after 9:00 p.m. The debt collector must also send the consumer a written notice containing the amount of the debt, the name of the creditor, and what the consumer can do if he or she thinks they do not owe the money.
  • The Law of Truth in Loans – The Truth in Lending Act deals with the disclosure of information related to the credit transaction. It requires any person who regularly extends credit to consumers for personal, family or household purposes to make certain disclosures regarding those credit terms. Disclosures include such things as monthly finance charge, annual percentage rate, when payments are due, late charges are due, and total finance charges. Disclosure requirements are very specific and vary depending on whether the credit is “closed” credit (a single or single extension of credit) or “open” credit (where additional extensions of credit are anticipated).

Talk to an attorney about federal credit laws

If you have questions about federal credit laws, consider speaking with an attorney. An experienced business and commercial law attorney can help you figure out the laws and the requirements you will have to meet.

You can also find information about consumer laws on the home page of the Federal Trade Commission and in the portal of United States Government Consumer Protection.

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