Consumer Protection Laws At the Federal Level
In today’s economy, it is incredibly common for individuals to have more debt than assets; it is just the nature of the post-2008 crash America we live in. As such, recent years have seen a major uptick in debt collection efforts, which in turn has caused a surge in faulty credit reports. This article will detail various laws, which were implemented to protect consumers and borrowers from improper collection, reporting, or communication tactics. If you feel your rights are being violated, it is essential that you advocate for yourself. On a macro scale, companies will only stop engaging in the wrongful conduct if it is more economically beneficial not to behave that way. Holding companies accountable for their behavior is the only way to create a lasting change in the way lenders conduct business, and we are here to help you fight that fight.
Truth in Lending Act (“TILA”)
In 1968, Federal Reserve Board enacted the Truth in Lending Act, referred to as “TILA”, to regulate the way consumers interacted with creditors and lenders. A critical portion of TILA is that it sets forth information that creditors and lenders must disclose to the consumer in a conspicuous manner prior to the consumer signing binding documents. These disclosures include: (1) the terms of the loan, (2) the total cost to the consumer; and (3) the annual percentage rate, or “APR.”
“TILA” regulates most forms of credit such as “closed-end credit”, or “installment loans”, as well as revolving credit, or lines of credit and credit cards. The purpose of “TILA” is to protect the consumer against unfair and inaccurate practices by a creditor, or lender. Most, if not all, states have their own statutes that mirror “TILA”, but they are essentially the same, with slightly more protection to the consumer.
Specifically, “TILA” requires lenders, who are offering adjustable-rate mortgages (“ARMs”) must provide the potential borrower with documents approved by the Federal Reserve Board that set forth the important details of an ARM. Another specific example of “TILA’s” requirements is the prohibition against a lender from receiving financial incentives to extend a loan with specific conditions and terms; TILA protects borrowers from being guided to loans that benefit the lender at the borrower’s expense.
A final example of TILA’s protections for consumers is known as the “right of recission.” The right of recission allows a borrower three (3) days to think over the details of the loan they just entered, and opt out of the agreement. A key component of this protection is that the recission may not trigger financial penalties to the consumer. This allows the borrower who was essentially forced into a bad deal through high-octane sales techniques to get out of the agreement without punishment.
TILA does not apply to interest rates, a creditor or lender can charge for services. Further, TILA does not regulate who is able to receive credit, thus TILA will not apply if you are denied credit. It is important to note that denial of credit may be pursued on other grounds.
You can also find more information about the Fair Debt Collection Practices Act here, the Telephone Consumer Protection Act (TCPA) here, and more information about the Fair Credit Reporting Act here.
If you, or someone you know, has had their rights violated under the TILA, we urge you to contact us today for a free initial consultation.