Consumer Protection Laws

Regulation B prohibits discrimination in the extension of credit on the basis of sex, marital status, age, race, color, religion, national origin, receipt of public assistance income, and the good faith exercise of rights under the Consumer Credit Protection Act. Requires lenders to notify applicants of decisions, explain why credit is denied, retain records for set periods after an adverse credit decision, and provide for penalties for failure to comply with the regulation.

Is designed to assure fairness of consumer credit, late charge accounting, and cosigner practices of financial institutions. Under the FCPR, loan contracts are prohibited from containing confessions of judgment, certain waivers of exemption, assignment of wages, and nonpossessory security interest in household goods unless the goods are purchased with the credit that is extended. This rule prohibits pyramiding of late charges and the misrepresentation of a cosigner’s liability.

Protects information collected by consumer reporting agencies such as credit bureaus. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. Companies that provide information to consumer reporting agencies have specific legal obligations, including the duty to investigate disputed information. Users of this information for credit must notify the consumer when an adverse action is taken on the basis of such reports.

Prohibits third-party debt collectors from employing deceptive or abusive conduct in the collection of consumer debts incurred for personal, family or household purposes. This Act does not pertain to financial institutions that collect debt that they originated. Such collectors may not contact debtors at odd hours, subject them to repeated phone calls, threaten legal action that is not actually contemplated, or reveal to other persons the existence of debts.

Protects consumers who purchase goods or services on credit. The rule only applies to consumer credit and is intended to prevent sellers who deliver poor goods or services from limiting a consumer’s remedies by selling the consumer’s note to another debt obligation to another creditor.

Regulation M implements the consumer leasing portions of the Truth in Lending Act. The purpose of Regulation M is to assure that lessees of personal property are given accurate and meaningful disclosures of the terms and conditions of personal property leases. These disclosures allow consumers to compare various lease terms with credit terms.

Prescribes uniform methods of computing the cost of credit, disclosures of credit terms, and procedures for revolving billing errors on certain credit accounts. Regulation Z was written to promote the informed use of consumer credit by consumers, and applies to loans for personal, family or household purposes. The major provisions of the regulation require lenders to:

• Provide borrowers with meaningful, written information on the cost of credit (including financial charges and the annual percentage rate (APR)).
• Respond to consumer complaints of billing errors on certain credit accounts.
• Identify credit transactions on periodic statements on open-end credit accounts.
• Provide certain rights regarding credit cards.
• Inform customers of the right to rescind certain real property transactions within a specific period of time.
• Comply with special requirements when advertising credit.

Requires financial institutions to file certain currency and monetary instrument reports. This information is used to help government agencies find money laundering activities relating to drug trafficking and white-collar crimes.

Requires depository institutions with assets over a certain amount, who originate or purchase first mortgage loans, and have a home or branch offices located in a Standard Metropolitan Statistical Area (SMSAs) to provide the public with information on how the depository institution is serving the housing credit needs of the community it serves.

Establishes availability schedules and limits holds that financial institutions can place on personal and business demand deposit or transaction accounts. It does not apply to savings deposits, time deposits or money market deposit accounts.

Requires the National Credit Union Administration to ensure that credit unions do not make loans secured by uninsured real estate or mobile homes located in specific designated flood hazard areas.

Requires clear and uniform disclosures of share/deposit account rates and fees so that members may compare competing savings and investment options. For each class of account, the corresponding terms must clearly state the APY (annual percentage yield), interest rate, dividend calculation method and any corresponding restrictions, any fees or transaction limits on the account, the compounding frequency, minimum balance requirements, requirements to earn a bonus (if applicable), handling non-cash items and the frequency and changes to the APY. Insufficiently automated financial institutions under $2 million in assets are exempt from TISA.

Governs the handling of consumer financial information. Under the Gramm-Leach-Bliley Act (GLB Act), financial institutions have restrictions on when they may disclose a consumer’s personal financial information to nonaffiliated third parties. The GLB Act grants consumers the ability to opt-out of the disclosure of their financial information to nonaffiliated third parties. The ability to opt-out is subject to certain exceptions. In addition, the GLB Act requires financial institutions to provide notices to consumers about its privacy practices and policies.

RESPA requires disclosure of certain information in the settlement, servicing and escrow activities associated with real estate lending, such as: (1) Timely information concerning settlement cost; (2) Prohibition of certain abusive practices (such as kickbacks or unearned fees); (3) Limits the use of escrow accounts; and (4) Requires detailed disclosures on the transfer, sale or assignment of servicing. RESPA applies to all real estate loans secured by residential real estate except: (1) Loans on properties of 25 acres or more; (2) Loans on vacant or unimproved property; (3) Business purpose loans, except if an individual places a lien on a 1-4 dwelling; (4) Temporary financing (i.e. construction or bridge loans); (5) Loan conversions not requiring a new note; (6) Assumptions that do not require lender approval; (7) Secondary market transactions; and (8) HELOC’s subject to Regulation Z.

Prohibits financial institutions that make real estate loans from discriminatory lending practices against a person. It is illegal to discriminate in fixing the amount, interest rate, duration, or other terms of the loan based upon: (1) Race; (2) Color; (3) Religion; (4) sex; (5) Handicap; (6) Familial Status (having one or more children under the age of 18) and (7) National Origin.

Establishes the required amount that a depository institution must reserve based on the level of transaction accounts on deposit. Institutions are required to maintain a certain level of reserves to assist the Federal Reserve Board in implementing monetary policy.