The 1960s are known for being an important time in U.S. history. It’s a period that ushered in many groundbreaking legislative changes, such as the Civil Rights Act of 1964, the Medicare Law of 1965 and the Voting Rights Act of 1965. Amid these groundbreaking federal laws, you’d be remiss to forget about the Consumer Credit Protection Act (CCPA).
Before the CCPA, consumers in the U.S. didn’t enjoy many rights when it came to lending, debt collection and credit reporting practices. At the time, lenders could (and often did) take advantage of consumers. They didn’t have to disclose loan terms or costs upfront, could charge exorbitant interest rates and were able to garnish a large percentage of your wages if you didn’t repay your debt as promised.
When the Consumer Credit Protection Act (CCPA) was passed in 1968, it aimed to protect consumers from these and other abusive practices. The law placed restrictions on banks, credit card issuers, debt collectors and more. The act introduced many safeguards that U.S. consumers still enjoy today, some 40+ years after its passage into federal law.
Over the years, Congress has passed more laws and placed them under the CCPA umbrella to help protect the financial lives of U.S. consumers. The Fair Credit Reporting Act, Equal Credit Opportunity Act and Fair Debt Collection Practices Act—along with a number of others—are included in this list.
Below you will find some of the most important provisions of the Consumer Credit Protection Act and its amendments.
The Truth in Lending Act (TILA)
The Truth in Lending Act, or Title I, was part of the original Consumer Credit Protection Act that Congress enacted in May of 1968. It has gone through several amendments since its initial passage.
This section of the CCPA provides for the “informed use of credit.” TILA accomplishes this goal by requiring lenders and credit card issuers to disclose the terms of credit when you borrow money.
Some of the details lenders and credit card issuers must disclose include:
- Annual Percentage Rate (APR)
- Finance Charges
- Amount Financed
- Payment Due Date
- Late Fees
- Prepayment Penalties
- Total Number of Payments
- Total Sale Price
Simply sharing this and other required information isn’t enough. These disclosures must be clear and easy to understand.
Thanks to TILA, you know how much you will pay when you borrow money. This information allows you to rate shop and compare the cost of credit from different creditors before you apply for financing.
The ability to compare costs between multiple lenders may be more meaningful than you realize. Rate shopping could save you thousands of dollars in interest. According to Freddie Mac, you could save an average of $3,000 by getting five quotes before you choose a mortgage loan.
TILA also gives you the right to change your mind about a loan if you have buyer’s remorse right away. You have a three day right of rescission to back out of a new loan without financial penalty.
The Federal Wage Garnishment Law
Title III of the Consumer Credit Protection Act is known as the Federal Wage Garnishment Law. It’s part of the original legislation that Congress passed in 1968. This section of the CCPA places restrictions on lenders and other creditors when it comes to garnishing wages from borrowers who default on their credit obligations.
Thanks to this section of the CCPA, you’re entitled to the following protections even if you can’t repay your debts as promised.
- Employers cannot fire you because your wages are being garnished (unless they’re being garnished for more than one delinquent debt).
- In most cases, no more than 25% of your after-tax wages can be garnished. (Child support, alimony and past-due taxes are three notable exceptions to this rule.)
The Fair Credit Reporting Act (FCRA)
Title VI of the Consumer Credit Protection Act wasn’t part of the original legislation. The Fair Credit Reporting Act was added under the CCPA when Congress passed it in 1970. The FCRA has been amended several times since the law’s initial passage.
The FCRA gives consumers many important rights when it comes to the information that consumer reporting agencies collect about them. It requires consumer reporting agencies (including the three major credit bureaus) to make sure the information they collect and share is fair, accurate and kept private.
Here are some of the key protections you can enjoy courtesy of the FCRA.
- Most types of negative information can only remain on your credit report for between seven and 10 years. (Unpaid federal tax liens and unpaid federal student loans are key exceptions.)
- You can access your own credit reports (and sometimes you can access them for free).
- You can dispute incorrect or incomplete information on your file.
- Consumer reporting agencies must delete or fix inaccurate, incomplete or unverifiable items in your file (typically within 30 days) after you submit a dispute.
- Only those with a valid need (called a “permissible purpose” in the act) can access your credit information. (This usually happens when you apply for credit or insurance.)
- Employers may access your credit, but only with your written permission.
- You can opt out and stop the credit reporting agencies from sharing your information with lenders, insurance providers and others who might use that information for marketing purposes to send you prescreened offers.
The FCRA gives additional protection to victims of identity theft.
A 2003 amendment to the FCRA, known as the Fair and Accurate Credit Transactions Act (FACTA) is the reason why you can access free copies of your three credit reports from Equifax, TransUnion, and Experian once every 12 months. To exercise this right, simply visit AnnualCreditReport.com.
The Equal Credit Opportunity Act (ECOA)
Title VII of the Consumer Credit Protection Act represents another amendment to the original legislation. Congress passed the Equal Credit Opportunity Act (ECOA) in 1974, and it’s gone through several amendments of its own since that time.
The ECOA is meaningful because it put an end to lending discrimination based on any of the following:
- Marital Status
- National Origin
- Receipt of Public Assistance
Thanks to the Equal Credit Opportunity Act, you can’t be denied a loan or other forms of credit based on any of the factors above.
The ECOA also makes creditors give you a reason when they turn you down for credit. However, in some cases you do have to ask for the explanation.
The Fair Debt Collection Practices Act (FDCPA)
The Fair Debt Collection Practices Act makes up Title VIII of the Consumer Credit Protection Act. This federal law first became effective in 1978.
The FDCPA puts strict rules into place that third-party debt collectors must follow as they try to collect unpaid debts. Debts covered by the law include:
- Credit Cards
- Private Student Loans
- Personal Loans
- Medical Bills
- Auto Loans
- Other Household Debts
You should note that commercial debts are excluded from the list above. So, if you borrow money in the name of a business, the FDCPA won’t cover these types of debts.
Some of the most important protections the FDCPA provides you are as follows.
Debt collectors cannot:
- Conceal their identity (unless trying to obtain your contact information)
- Call you before 8:00 a.m. or after 9:00 p.m. (based on your local time zone)
- Reveal information about your debt to others
- Lie or mislead you in an attempt to collect the money you owe
- Harass you, threaten you with physical harm, use obscene language or call you repeatedly to pressure you
- Collect additional interest or fees unless your original contract or state law allows
- Seize funds from your paycheck without a court order
- Call you at work if you ask them to stop
You also have the right to information about the debt itself. A debt collector must reveal the name of the original creditor and how much you owe.
You have 30 days to dispute the debt if you disagree. If you do dispute the debt, the debt collector has to pause collection efforts until it sends you verification details.
Thanks to the Consumer Credit Protection Act and the numerous laws housed under its cover, you enjoy many rights where your financial life is concerned. And while it would be impossible to memorize all of these rights, it’s important to be familiar with them.
The CCPA protects you every time you apply for credit. These rights continue to protect you after a lender or credit card issuer approves your application. In the event that you can’t pay back the money you borrow as promised, provisions of the CCPA are there to protect you again, from unfair debt collection practices.
When you know your rights, you’re better equipped to protect yourself and your loved ones from bad actors. If you believe a lender, creditor, debt collector or consumer reporting agency is violating the CCPA (or any of its many amendments), you can reach out to the Consumer Financial Protection Bureau or the Federal Trade Commission to submit a complaint. You can also seek the advice of a consumer protection attorney if you need additional advice.