consumer credit: an overview
Credit allows consumers to finance transactions without having to pay the full cost of the merchandise at the time of the transaction. A common form of consumer credit is a credit card account issued by a financial institution. Merchants may also provide direct financing for products which they sell. Banks may directly finance purchases through loans and mortgages.
The law of consumer credit is primarily embodied in federal and state statutes. These laws protect consumers and provide guidelines for the credit industry.
States have passed various statutes regulating consumer credit. The Uniform Consumer Credit Code has been adopted in eleven states and Guam. Its purpose is to protect consumers obtaining credit to finance their transactions, ensure that adequate credit is provided, and govern the credit industry in general.
In 1968, Congress passed the Consumer Credit Protection Act in part to regulate the consumer credit industry. It requires creditors to disclose credit terms to consumers. The Consumer Credit Protection Act also protects consumers from loan sharks, restricts the garnishing of wages, and established the National Commission on Consumer Finance to investigate the consumer finance industry. Credit card companies and credit reporting agencies are also regulated by the Act. The Act also prohibits discrimination based on sex or marital status in the extending of credit. The Act also regulates certain debt collectors.
Federal consumer credit law was modified with respect to credit cards when in May 2009 President Obama signed into law the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act. The federal statute contains several provisions that constrain the practices of financial institutions that consumer credit cards. These include bans on practices such as retroactive or unfair rate increases and late fees that result from bills that arrive close to the due date, among other prohibitions. The statute also includes various requirements for credit card issuers, including that contract terms be written in language that consumers can see and understand, and remain stable for the first year of the contract. Moreover, the Act contains monitoring and enforcement provisions, including increased penalties for companies that violate the law.
menu of sources
U.S. Constitution and Federal Statutes
- Consumer Credit Protection Act - 15 U.S.C, Chapter 41
- Truth In Lending Act - 15 U.S.C. § 1601
- Fair Credit Reporting Act - 15 U.S.C. § 1681
- Fair Credit Billing Act - 15 U.S.C. § 1637
- Equal Credit Opportunity Act - 15 U.S.C. §§ 1691 - 1691e
- The Fair Credit Debt Collection Act - 15 U.S.C. §§ 1692 - 1692o
- CRS Annotated Constitution
Federal Agency Regulations
- Code of Federal Regulations: 12 C.F.R. - Banks and Banking
Federal Judicial Decisions
- U.S. Supreme Court:
- U.S. Circuit Courts of Appeals: Recent Decisions on Consumer Credit
- Uniform Commercial Code - (As Adopted by Particular States)
- Uniform Consumer Credit Code
- New York law governing Unauthorized or Improper Use of Credit Cards and Debit Cards - New York General Business Law Article 29-A §§ 511 et seq.
- New York law governing Debt Collection Procedures - New York General Business Law Article 29-H §§ 600 et seq.
- New York law governing Consumer Credit Balances - New York General Business Law Article 34-A §§ 710 et seq.
- California law governing credit cards and various other aspects of consumer credit - California Civil Code §§ 1747 et seq.
- California law governing fees in consumer credit agreements and related consumer protections - California Financial Code §§ 4000 et seq.
State Judicial Decisions
- N.Y. Court of Appeals:
- Appellate Decisions from Other States
Key Internet Sources
- Consumer Law Page
- U.S. Federal Trade Commission
- Consumer Handbook to Credit Protection Laws (on-line pamphlet from the Federal Reserve)
- Banking and Credit Cards (Nolo)
- Reviews of Credit Reporting Websites
- National Foundation for Credit Counseling
- Consumer Credit Guide
- Credit Repair (Nolo)
- House Committee on Banking and Financial Services (includes information from Subcommittee on Financial Institutions and Consumer Credit)
- ILRG Legal Forms Archive: Credit and Collection, Borrowing and Lending
Useful Offnet (or Subscription - $) Sources
- Good Starting Point in Print: Dee Pridgen, Consumer Credit and the Law, Clark Boardman Callaghan, (2004)