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The Laws - Consumer Credit

If you were violated by any of the consumer laws listed below, you may be entitled to statutory damages of up to $1,000. Call the Davis Consumer Law Firm at
(855) 4-DAVIS-LAW for a free consultation.



Fair Credit Reporting Act (FCRA)

Originally passed in 1970, the Fair Credit Reporting Act (FCRA) regulates the collection, dissemination and storage of consumer's credit information and the way the reporting agencies are allowed to use that information. It governs who is authorized to access your credit information, how long negative credit information can stay on your report and states your right to dispute any inaccurate information on your credit.

If you can prove your rights were violated under this Act, you may be entitled to statutory damages of up to $1,000 or actual damages (whichever is greater), plus any possible punitive damages. The noncompliant party must also pay all attorney's fees and costs, under the FCRA.

Be aware of some of the more common FCRA violations:
  • Failing to report a discharged debt in bankruptcy
  • Reporting information older than 7 years
  • Reporting old debts as new
  • Reporting a debt which was settled
  • Mixing credit information of multiple parties
  • Failing to correct any inaccurate information from the debtor's file
  • Supplying credit information despite reported identity theft
  • Applying late fees to debts paid on time

  • If a bank, credit card company or other responsible party reports the following information to a credit reporting agency, they may be under violation of the FCRA:

  • Notifying the credit reporting agency that a debtor has disputed a debt
  • Failing to conduct an investigation of the disputed debt within 30 days
  • Failing to provide the debtor with necessary information to complete the dispute process
  • Failing to report the results of the investigation to the debtor
  • Submitting information to a credit reporting agency that is known to be incorrect

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    Truth in Lending Act (TILA)

    The Truth in Lending Act (TILA) is designed to protect consumers in their dealings with lenders and creditors. This Act required crucial information to be disclosed to a borrower prior to extending credit, such as the Annual Percentage Rate (APR), the terms of the loan and the total costs to the borrower. This information must be clearly visible on the documents presented to the consumer and ensured that the consumer fully understands the terms before signing.

    If you can prove that you were intentionally deceived by a creditor or lender and has violated the TILA, call us for a free case evaluation (not understanding the terms of a transactional agreement is not an excuse). You may be entitled to statutory damages of up to $1,000 and/or the sum of actual damages sustained as a result of the creditor's violation. The noncompliant party must pay all attorney's fees and costs.

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    Credit Card Act of 2009

    The Credit Card Act of 2009 was signed into law by President Obama on May 22, 2009. The law was designed to put an end to unfair credit card practices, improving consumer disclosures and ending some flagrant practices in the credit card industry.

    Some of the consumer protections stated in this Act are:

  • Retroactive rate increases
  • Six months after the credit card companies have raised your interest rate, they must review your situation and return the interest rate to the level before the raise if you've consistently paid your credit card bill on time. Credit card companies also cannot increase interest rates until 12 months have passed since the account was originally opened (for cards with a special promotional interest rate, credit card companies can't increase rates until 6 months after that card has been opened).

  • More advance notice of rate hikes
  • Consumers now get a 45 day notice before key contract changes take effect, including rate increases. When the credit card companies contact you regarding the rate hike, they must write in a clear manner informing you the ability to cancel your credit card. If the consumer wishes to close down their credit card, the credit card companies are not allowed to consider that a default on the existing balance and cannot charge you a fee or penalty.

  • Fee restrictions
  • Overlimit fees and penalties are no longer permitted, unless the consumer allows the creditor to approve overlimit transactions. Payments received by the due date or the next business day (if the bank doesn't accept mailed payments on the due date) won't trigger a late fee. If the cardholder pays at a local branch, the payment must be credited the same day.

  • Card issuance restriction to students
  • Applicants under age 21 who want credit cards must have a co-signer (ie. parent, legal guardian) on the account. If a parent is a co-signer, they must give consent in order for credit limits to be increased. Credit card companies are no longer allowed to provide incentives (freebies) for students to sign up for credit cards on or close to a college campus.

  • Ending of double-cycle billing and "universal default"
  • The Act bans double-cycle billing, the practice of basing finance charges on the current and previous balance. Under this method, the issuer could charge interest on debt already paid off from the previous month. The ending of "universal default" prohibits creditors from raising your interest rates if you defaulted on another, completely non-related bill, with another lender.

  • Fairer payment allocation
  • This law requires above-the-minimum payments to be applied first to the credit card balance with the highest interest rate, not to lower-rate balances first.

  • More time to pay
  • Credit card companies must now send statements 21 days before a payment is due.

  • Gift card protections
  • The legislation prohibits gift cards from expiring for at least five years. The issuer cannot assess inactivity fees, unless the card has gone unused for 12 months.


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    Credit Repair Organization Act (CROA)

    The Credit Repair Organization Act, Title IV of the Consumer Credit Protection Act was signed by President Clinton on September 30, 1996. It intends to protect consumers who purchase services from credit repair organizations, shielding them from unfair or deceptive advertising and business practices. It outlines prohibited practices, required disclosures, contract requirements, liability, and penalties for non-compliance and the procedures to report non-compliance. It is important for those consumers using these services to be aware that a credit repair company can only be paid after services have been rendered. Companies that charge excess "setup" fees or all of their fees upfront violate the provisions of this law.

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    Electronic Funds Transfer Act

    The Electronic Funds Transfer Act was passed by the U.S. Congress in 1978 and signed by President Jimmy Carter, protecting consumers engaging in the transfer of funds through electronic methods. This encompasses the use of debit cards, automated teller machines and automatic withdrawals from a bank account. This law also provides a means of correcting transaction errors and limits the liability from any losses due to a lost or stolen card.

    Some guidelines under this Act for consumer protection:

  • Requirements for EFT providers
  • Financial institutions and any third party engaged in EFT services must disclose specific pieces of information to consumers before performing any transactions. This information must be available in a form that you can possess, such as in a downloadable and printable document or in a hardcopy format.

  • Unauthorized Transactions
  • If you suspect any unauthorized activity such as identity theft or a lost or stolen debit card, you have 60 days to report an unauthorized transaction to your financial institution with the time limit commencing on the date of the first periodic statement which contains the transaction.

    The financial institution has 10 business days once they are notified to conduct an investigation of the claim. The consumer cannot be held responsible for more than $50 of the unauthorized expenditures if they follow proper procedures but they should verify with their bank to make sure it has not specified a different liability maximum. If a consumer's debit card has been lost or stolen, they must file a claim within two business days to ensure protection from unauthorized transactions made on the account. If it is reported within 60 days of the first incorrect periodic statement, they can only be held legally responsible for up to $500.

  • Required use
  • Creditors cannot make it mandatory for consumers to use an electronic fund transfer, either to make or to receive payments. Creditors are allowed to encourage this form of payment by offering reduced interest rates, but they must provide an additional payment option.

  • Withdrawal limits
  • This Act requires banks to limit the amount of money that can be withdrawn from a one's account during any given time period, protecting the consumer by limiting loss in the event that their card is stolen.

  • Issuing cards
  • A bank or credit company cannot issue someone a debit card without their consent. The issuer must disclose specific information to consumers such as fees and liability regulations when they are first issued the debit or bank card and must contain a unique identification determined by the magnetic strip and account number.

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