Chapter 22

1. Chapter 22 Consumer Protection

2. Consumer Protection • Reasons favoring consumer protection • Notion of fairness in equal economic power • Protect honest businesses • Reasons against consumer protection • Cost • Caveat emptor doctrine

3. Federal Trade Commission • “Federal consumer protection agency” • Consumer protection regulations • Bait and switch • Modification of the holder-in-due-course rule • Mail-order merchandise • Cooling-off period for door-to-door sales • Telemarketing rule

4. Consumer Privacy • Gramm-Leach-Bliley Act • Created privacy rights for consumers and duties for financial institutions • Imposes privacy notification • Require that consumers be given the opportunity to “opt out” of programs

5. GLB Privacy Notice from Financial Institutions • Nonpublic information collected • Nonpublic information shared • Affiliates/nonaffiliates with whom information is shared • The aforementioned information regarding prior customers • Aforementioned information regarding 3rd party independent contractors with whom the information is shared

6. GLB Privacy Notice from Financial Institutions • Right to and how to opt out of information sharing with 3rd parties • How “opt out” applies to the Fair Credit Reporting Act • How security and confidentiality are protected • Legal exceptions

7. Truth-in-Lending Act • Regulation Z • Types of credit covered • Types of creditors covered • Disclosure of credit terms • Disclosure of finance charge and annual percentage rate

8. Truth-in-Lending Act • Credit cards • Credit advertising • Penalties • Creditor records • Enforcers

9. Fair Credit Reporting Act • Main purpose is to provide accurate current information about consumers but not businesses • Consumers have right to know their credit information • FCRA allows consumers to sue for violations

10. Equal Credit Opportunity Act of 1974 • Initially required financial institutions to extend credit regardless of gender or marital status • Amended in 1976 to prohibit credit discrimination based on national origin, race, religion, color, or age

11. Equal Credit Opportunity Act of 1974 • Four aspects about the ECOA • Restricted to commercial lenders • Preserves lenders’ rights to reject loan applicants because they are not creditworthy • Does not require lenders to make loans • Limits the basis for which creditors can turn down loan applicants

12. Equal Credit Opportunity Act of 1974 • Creditor deadline • ECOA enforcement • ECOA remedies

13. Fair Credit Billing Act • Establishes a way for consumers to correct credit card billing errors • Allows retailers to offer cash discounts • Restricts a card issuer’s reporting past due payments to third parties

14. Fair Debt Collection Practices Act of 1978 • Only personal, family, and household debts are covered • Debt collectors • Restrictions for contacting a debtor • Contacting others about debtor’s bill • Prohibited collection practices • Debtor control over specific debts • Debtor remedies • Debtor complaints

15. Electronic Fund Transfer Act of 1978 • Set out liability rules governing EFTs • General consumer protections • Records • Unauthorized use • Mistakes • Sanctions and damages

16. Bankruptcy • Straight bankruptcy • Nonexempt property • Exempt property • Federal exemptions • State exemptions

17. Bankruptcy Consumer Protections • Discharge • Limits on who can go bankrupt • Difficulty in reaffirmation of debts • Bankruptcy for less-than-honest debtors

18. Bankruptcy Consumer Protections • Limited utility service cutoff • Nullification of bankruptcy clauses • Waiver of exemptions not allowed for nonpurchase money security interests • The Perez doctrine

19. Bankruptcy • Bankruptcy limits • “Loading up” with luxury purchases immediately before filing • Debt adjustment (Chapter 13 bankruptcy) • 1984 amendments affecting consumers

20. Recap – Terms to Know • Federal Trade Commission • Consumerism • Bait advertising • Holder-in-due-course • Telemarketing rule • Gramm-Leach-Bliley Act • Electronic funds transfer • Bankruptcy