Posted by admin on August 8, 2008
Fair Credit Billing Act (FCBA) (effective 1975) applies only to open-end credit transactions. Among other things, the act specifies a step-bystep procedure for error resolutions. The procedure is as follows:
- The consumer must give written notice of a billing error, in a letter, within 60 days of receiving the bill in question.
- The creditor must respond within 30 days and resolve the dispute within two billing cycles, but not longer than 90 days. Within 90 days, the creditor must either explain why the bill is correct or correct the error.
- During the resolution period no collection activity is permitted on the disputed amount and no finance charges may be collected as well. The account may not be reported as delinquent, nor can it be closed nor restricted because of the consumer’s failure to pay the disputed amount, and/or related charges.
- If the consumer still believes the billing to be in dispute after the resolution period, the consumer must again notify the creditor in writing. During this period, the creditor may not report the account delinquent without also reporting that the amount is in dispute. The creditor must also report to the consumer the name and address of each person to whom the creditor is reporting information about the delinquency.
- The creditor must also report how the matter was resolved, to anyone who received a report on the delinquency.
- Creditors must include an address on periodic statements to which consumer billing inquiries can be addressed.
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Equal Credit Opportunity Act (ECOA) (effective 1975; amended 1977, 1988 and 1991) prohibits creditors from:
- Discriminating against credit applicants because of sex, race, color, national origin, age, marital status, religion or because a consumer’s income comes from a public assistance source (e.g., social security or disability benefits). The act does permit the use of gages as a variable in an empirically derived, statistically sound, credit scoring system provided that the age of an elderly applicant (62 or over) is not assigned a negative factor or value. In addition, creditors may not discount or refuse to consider income because it comes from retirement benefits, part-time employment or alimony/child support.
- Denying credit because the consumer, in good faith, exercised rights under the Consumer Credit Protection Act (such as disputing a credit card bill under the Fair Credit Billing Act or a credit bureau report under the Fair Credit Reporting Act.)
- Failing to provide written notice of adverse action within specified time frames when a consumer’s application is denied or when certain other adverse actions are taken. The notice must either disclose the reasons for the denial or adverse action or inform the consumer of the right to obtain those reasons.
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Fair Credit Reporting Act (FCRA) (effective 1971, amended 1978, 1989, 1992 and 1994) requires:
- Creditors to notify consumers of the name and address of credit reporting agencies (credit bureaus) whose reports were used as a basis for adverse credit decisions.
- Credit reporting agencies, upon request: To disclose to consumers the nature and substance of information in their credit bureau records; to reinvestigate disputed information and make corrections; and, to allow consumers to file their explanations if reinvestigations do not resolve disputes.
- Credit reporting agencies to notify recent recipients (as specified by the consumer) of the credit reports, of corrections that may have been made, or, in certain instances, the consumer’s side of the story, and to include this material in future reports.
- Credit reporting agencies to exclude from consumer reports adverse credit records more than seven years old (ten years for bankruptcies.)
- Credit reporting agencies to furnish reports only to those who have a Permissible purposes for the information.
Note: The FCRA was amended in 1992 and imposes an obligation upon a credit reporting agency to include overdue child support in a consumer report, provided that information is reported to the agency by a party charged with the collection of the child support.
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Truth in Lending Act (TILA) (effective 1969; amended by Unsolicited Credit Card Act, effective 1970; amended by the Truth in Lending Simplification Act, effective 1982; amended by the Home Equity Loan Consumer Protection Act, effective 1989; amended by the Fair Credit and Charge Card Disclosure Act, effective 1989; amended by the Home Ownership and Equity Protection Act, effective October 1995). This act and the acts which amended or added to its provisions were primarily enacted to prevent abuses in consumer credit cost disclosures and to require uniformity in such disclosures throughout the credit industry by making terms of credit known to consumers.
The specific provisions of the act are implemented by Regulation Z. Regulation Z explains in great detail who and what is covered by the regulation and gives the specific disclosure and other requirements that have to be met for open-end and closed-end credit transactions. It should be noted that disclosures of the costs involved in credit card plans offered by mail, telephone or by applications distributed to the general public are subject to the disclosure requirements laid down in Truth in Lending and Regulation Z.
The act covers among others any person who regularly extends credit used primarily for personal, family or household purposes if the credit is subject to a finance charge or payable by a written agreement in more than four installments. The act also covers advertising of such credit transactions. Credit transactions of over $25,000 are exempt from the act (unless there is a security interest taken in real property or a mobile home).
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The statute of limitations (SOL) for a delinquent debt is the time limit for the creditor to file a lawsuit. This period starts when the debtor becomes delinquent. The fact that the SOL has “run” (expired) on a particular debt will not necessarily prevent a lawsuit from being filed (via a Summons And Complaint), but the defendant can have the suit dismissed on this basis.
The Statute Of Limitations only covers lawsuits, and SOL expiration does not affect other types of collection action or reporting of the account to credit bureaus. The creditor or collection agency may theoretically continue with letters and telephone calls forever (although third-party collectors are subject to the “cease and desist” provision of the Fair Debt Collection Practices Act.) However, they will generally put much less effort into collecting “Out-Of-Statute” debts, and may give up easily. Out-Of-Statute debts can still be reported to credit bureaus for the time limits specified in the Fair Credit Reporting Act.
Credit cards are generally considered Open Accounts. Auto loans and other installment agreements are Written Contracts.
