2.

05- Consumer Law

Consumer Credit (a.k.a credit debt)

o Debt that a person gets from purchasing a good or service
o Ex: credit cards, lines of credit, some loans
o Economist use consumer credit to measure economic growth
o If consumers can easily borrow/repay money, then the economy is growing
Unfair Practices
o Every state has its own consumer protection law that prohibits deceptive
practices, it also prohibits unfair or unconscionable practices (called UDAP or
Unfair and Deceptive Acts and Practices)
Varies greatly from state to state
Is the main protection to consumers
o These statues provide bedrock protections for consumers
o Usury Law
Governs interest rates (specifically the maximum rate of charge allowed)
Used for any money borrowed privately and applied on a state to state
basis
Federal government can mandate a federal usury law, but they allow the
states to decide the interest amount
Only exception was in 1980 due to high inflation, they allowed banks to
ignore state usury laws
Anyone who is caught charging over their states interest limit for monies
loaned would be in violation of the statute and be subject to penalty and
civil suit action
General: payday loan store can lend above the limit if they have a special
permit from the state
Legal: exceptions include when there is a legally binding contract for
certain loans that can be charged at the highest legal rate, uncommon,
known as judgment rates
o Identity Theft
Roughly 7 percent of all households in the US had at least one member
experience ID theft in 2010 (around 8.6 million)
In 1999, help desk worker took a spreadsheet of logins and passwords
from the office of the software firm and sold the info that gave him access
to roughly 33,000 credit reports, he made between 50-100 million ,
unauthorized user gains access to one of your accounts to make
transaction w/o your permission
More common, easier to catch, can take note of any unauthorized
charges on your account, can have the charges you didnt authorize
removed
Ex: shopping with your money,
Someone uses your personal info to open or use credit in your name

Harder to spot
Can open new accounts that you may not notice until theres a
problem or you apply for a new loan/line of credit
o Prevention: credit monitoring services- flag issues with
both types of identity theft
Individual account protections: good for one
account
o Bait and Switch
Illegal tactic when a seller advertises a product with the intention of
persuading the customer to purchase a more expensive product
Ex: telling the customer that the original product is sold out or no longer
available and push for the customer to but the costlier product
Legal action can only be taken if the seller is not actually providing the
original product
o Fly by night company
Scam, unreliable, short-lived company
There one minute and gone the next
Misrepresentation- give untrustworthy info
Ex: voted #1 company in the word, when in reality nobody has heard of
them
Uniform Consumer Credit Code (UCCC)
o Code of conduct that governs consumer credit transactions (guidelines for the
purchase and use of all types of credit products)
o Protects consumers from fraud and misinformation
o Ex: limitation on rates charged to consumers by lenders
Federal Trade Commission
o Bipartisan (involving the agreement of two political parties that usually oppose
each others policies) federal agency
o Prevent business practices that are anticompetitive or deceptive or unfair to
consumers
o Protect consumers (prevent fraud, deception, and unfair business practices)
Collect complaints about issues from data security and deceptive
advertising to identity theft and Do No Call Violations, makes them
available to law enforcement agencies worldwide to follow-up
o maintain competition (prevent anticompetitive mergers and business practices)
enforces antitrust laws that helps ensure that markets are open and free
challenges anticompetitive mergers, such as higher prices, lower quality,
fewer choices, or reduced rates of innovation
monitors business practices and reviews potential mergers
o advance performance (organizational, individual, and management excellence)
o Only federal agency with both consumer protection and competition jurisdiction
in broad sectors of the economy
Regulated by

o Fair Credit Reporting Act

Regulated the collections of credit information and access to your credit
report
Ensures fairness, accuracy, and privacy of the personal info contained in
the files of the credit reporting agencies
Requires that an person or entity requesting your report must demonstrate
a permissible purpose for the info before it is releases
Designates the FTC as the enforcement authority
Ex: lets you know what is in your file, ask for your credit score, correct
info that is incomplete or inaccurate, remove outdated info
o Equal Credit Opportunity Act
Prohibits discrimination based on race, color, religion, national origin, sex,
marital status, age, receipt of public assistance, or good faith exercise of
any right under the Consumer Credit Protection Act
Creditors must provide applicants with the reasons underlying decision to
deny credit
Credit reports
o Detailed report of an individuals credit history
o Credit bureaus collect info
o Lenders use reports to determine loan applicants credit worthiness
o Three major credit reporting bureaus= Equifax, Experian, TransUnion
o Use info (current and previous addresses, SS#, employment history, credit
history)
o Negative info stays on report for 7 years and bankruptcy filings stay for 10 years
o Insurance policy or rental property, creditors, insurers, landlords allowed legal
access to someones credit report. These entities have to pay the credit bureaus for
the report, which is how credit bureaus earn money
o 4 parts to a credit report
Personal info (SS#, name, address)
Trade lines, a.k.a detailed info over lines of credit
Public records (bankruptcies, judgments, tax liens)
List of Entities who recently inquired to see the individuals credit report

http://www.3debtconsolidation.com/usurylaws.html
https://www.debt.com/solutions/identity-theft/identity-theft-basics/
http://www.investorwords.com/389/bait_and_switch.html
http://www.thefreedictionary.com/fly-by-night
http://www.identityguard.com/identity-theft-resources/articles/some-of-the-mostfamous-cases-of-identity-theft-revealed/
http://www.investopedia.com/terms/c/consumercredit.asp
https://www.ftc.gov/about-ftc/what-we-do
http://www.investopedia.com/terms/c/creditreport.asp
https://www.ftc.gov/enforcement/statutes/equal-credit-opportunity-act