3.Federal Laws and Consumer Protection

In this lesson, you will be introduced to…

…Federal Laws and Consumer Protection.

he federal government has been active in consumer rights protection since…

…the 1960s.

The federal government has been active in consumer rights protection since the 1960s. Beginning with a Consumer Bill of Rights that included:

• Right to Safety

• Right to Information

• Right to Choose

• Right to Be Heard

By the 1980s the Consumer Bill of Rights had expanded to also include:

• Right to Basic Needs

• Right to Redress

• Right to Consumer Education

• Right to a Healthy Environment

Truth in Lending Act (TILA)-1968

Truth in Lending Act (TILA) Code of Federal Regulations (CFR). Regulation Z, 12 CFR §1026.32 et. seq. The Truth in Lending Act came about in 1968. It protects consumers when dealing with lenders by requiring lenders to disclose the annual percentage rate, finance charges, amount financed, total number of payments and total sales price on a loan. It also gives consumers three days to cancel a refinance loan or other new debt secured by the consumer's residence before it becomes permanent.(1)

Fair Housing Act-1968 
(amended in 1988)

The Fair Housing Act was originally passed in 1968 and amended in 1988. It specifically prohibits discrimination in the sale or rental of housing based on race or color, religion, sex, national origin, familial status, or disability.

Fair Credit Reporting Act-1970

(amended in 2003)

The Fair Credit Reporting Act was passed in 1970. It regulates the information credit reporting agencies can collect and access to that information. The Fair Credit Reporting Act was amended in 2003 to add the Fair and Accurate Credit Transactions Act (FACTA). FACTA protects consumers identity by limiting the ways consumer information can be shared and specifying requirements for information privacy, accuracy and disposal. Associated with FACTA are the Red Flag Rules which require financial institutions to have a written program to detect, prevent and mitigate identity theft.(2)(3)

Fair Credit Billing Act-1974

The Fair Credit Billing Act was signed into law in 1974. It sets out the rights a consumer has to dispute billing errors, unauthorized charges, and goods or services that were not received by the consumer.(4)

Real Estate Settlement Procedures Act (RESPA)-1975

Enacted in 1975, the Real Estate Settlement Procedures Act (RESPA) requires disclosures of the complete settlement cost of a real estate transaction, eliminates abusive practices in the settlement process, limits the use of escrow accounts, and prohibits kickbacks.(5)

Equal Credit Opportunity Act-1975

Since 1975 the Equal Credit Opportunity Act has prohibited lender discrimination based on race, color, sex, religion, national origin, age or receipt of public assistance.

Fair Debt Collection Practices Act-1977

The Fair Debt Collection Practices Act became law in 1977. It made it illegal for debt collectors to use deceptive, unfair or abusive practices when they collect debts.(6)

New Homeowners Protection Act-1998

The New Homeowners Protection Act came about in 1998 and allows homeowners who pay down their mortgage loan to 80% or more of the home's value to request cancellation of their private mortgage insurance (PMI).(7)

Gramm-Leach-Bliley Act-1999

The Gramm-Leach-Bliley Act came into being in 1999. This act requires that companies providing financial services protect consumers' private data and disclose their information sharing practices.(8)

The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act-2008

The SAFE Act was passed in 2008 for the purposes of:

• Collecting and upgrading the information flow to and between regulators

• Providing increased accountability and tracking of mortgage loan officers

• Increasing consumer protections

• Supporting anti-fraud measures

• Providing free, easily accessible information to consumers about mortgage loan officer's employment history and publicly adjudicated disciplinary and enforcement actions

It designates minimum standards for the state licensing and registration of residential mortgage loan originators.(9)

Consumer Protection

Enforcement of all these federal laws fell to a number of different agencies creating an inefficient and sometimes ineffective system of consumer protection. 

However, that would change with the coming of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.