LAWDOG CREDIT REPORTING

LAWDOG is intended to assist in the understanding of basic concepts. See Disclaimer. Always obtain legal advice from legal professionals.

Equal Credit Opportunity Act

The Equal Credit Opportunity Act prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. In certain situations, creditors may request some of this information, except information about religion, but creditors may not use it to discriminate when deciding whether to grant credit.

The Equal Credit Opportunity Act may apply to consumer transactions, as well as business transactions, with companies that regularly extend credit, including banks, finance companies, retail and department stores, credit card issuers, and credit unions. It may also apply to others in the credit granting process, including real estate brokers who arrange financing. See LAWDOG Equal Credit Opportunity Act. Always discuss actual cases with your actual legal advisor or legal department.

Fair Credit Billing Act

The Federal Fair Credit Billing Act generally applies to "open end" credit accounts such as credit cards, revolving charge accounts, and overdraft checking accounts. The Fair Credit Billing Act establishes procedures for resolving mistakes on credit billing account statements, including charges not made by consumer, charges that are incorrectly identified or show the wrong amount or date; computational errors; failure to reflect payments or credits properly; not mailing or delivering credit billing statements to the consumer's current address, if the address was received by the creditor in writing at least 20 days before the billing period ended; and charges for which an explanation or documentation is requested to correct possible error.The Federal Fair Credit Billing Act generally does not apply to loans or credit sales that are paid according to a fixed schedule, such as the typical automobile financing. Always discuss actual cases with your actual legal advisor or legal department.

Electronic Fund Transfer Act

The Electronic Fund Transfer Act applies to electronic fund transfers, such as may be involved point-of-sale debit transactions, automatic teller machines (ATMs), and other electronic banking transactions. Consumer dispute mechanism is similar to that of The Fair Credit Billing Act. Always discuss actual cases with your actual legal advisor or legal department.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act was enacted to eliminate abusive, deceptive and unfair collection practices by "debt collectors" and to protect consumers from these practices. Under the Fair Debt Collection Practices Act, a "debt collector" is any person whose business uses interstate commerce or mail to collect any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owing or due to another person. See LAWDOG Fair Debt Collection Practices Act. Always discuss actual cases with your actual legal advisor or legal department.

Federal Truth In Lending Act

The Federal Truth in Lending Act, which starts at 15 United States Code Section 1601, may apply to loans or other extension of credit by creditors such as banks, retailers, finance companies, and others, or individuals where:

• The credit is offered to a consumer;
• The credit is primarily for personal, household or family purposes;
• The creditor offers or extends credit regularly to the public, which is defined as five or more times in a year for mortgage or home equity lenders, and may be fifteen or more times in a year for others.
• The credit is either subject to a finance charge or repayable by written agreement in more than four installments.

In addition, excluding credit transactions secured by real property or by personal property used as a consumer’s principal dwelling, the credit must be for an amount less than $25,000.

The Federal Reserve Board is authorized to administer and interpret the Federal Truth in Lending Act as Regulation Z. Typical consumer credit transactions subject to the Federal Truth in Lending Act may include some mortgages, home equity or improvement loans secured by the principal residence of a consumer, store credit purchases, credit card agreements, installment loans, and automobile financing. Some consumer transactions may be exempt from coverage including certain student loans, and public utility payment plans.

In all credit transactions covered by the Federal Truth in Lending Act, creditors and lenders are required to furnish a clear description of all the important terms and requirements relating to any credit transaction to consumers before extending credit.

Prior to entering into an installment credit contract or closed-ended credit transaction, the following information must be given to the consumer:

Total sales price of the goods purchased. This is the price of the item plus interest and any other charges as a condition of granting credit to the consumer, including any down payment or trade-in value.

Amount financed. This is the total amount borrowed plus any other amount advanced by the lender to the consumer.

Finance charge. This is the cost of the credit transaction, which includes the cost of all the interest to be paid over the term of the loan and the cost of all other charges by the creditor as a condition of extending credit to the consumer. These other charges may include prepaid interest ( "points"), appraisal fees, credit report fees, service charges, or charges for credit insurance. Special rules may apply to mortgage transactions which exclude some other fees from the finance charge.

Annual Percentage Rate ( APR ) The APR essentially projects that the total finance charge ( total interest plus other charges ) will be paid in equal installments over the term of the loan, then calculates the amount paid each year as a percentage of the amount financed. APR may normally be higher than the "base" interest rate on the loan. APR is intended to provide a uniform “true cost of credit” which the consumer can compare with other lenders.

Total of payments. The total of all payments the consumer must make under the agreement, which equals the amount financed plus the finance charge.

Payment schedule and amounts of each payment. The schedule of periodic payments must be clearly set forth in the contract. This includes the due date for each payment, the number of payments, and the size of each payment. Any balloon payment, or payments for a different amount must also be clearly indicated.

In cases involving a variable interest rate, a clear description must be given of the calculation used to vary the rate, including the “index” used to base interest rate changes, such as a defined prime rate, as well as the periods when the rate may be adjusted. Lenders may also be required to disclose the existence of any security interests in any property of the consumer, the rules for determining late payment fee assessments, amount, and penalties for prepayment of the loan.

The Federal Truth in Lending Act may permit a consumer to file a lawsuit if a creditor fails to correctly provide the required disclosures. The court may order actual damages suffered as a result of a violation, statutory damages, court costs and attorneys fees. Under certain circumstances, consequential damages, such as emotional distress may be ordered. Actions for violating the Federal Truth in Lending Act disclosure rules may be valid against “assignees” of the loan or credit. Always discuss actual cases with your actual legal advisor or legal department.

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