Major Consumer Protection Laws
Following are the major laws that govern financial institutions and protect individuals in their financial dealings.
Community Reinvestment Act of 1977
Encourages financial institutions to help meet the credit needs of their communities, particularly low- and moderate-income neighborhoods.
Consumer Leasing Act of 1976
Requires that institutions disclose the cost and terms of consumer leases, such as automobile leases.
Expedited Funds Availability Act (1987)
Specifies when depository institutions must make funds deposited by consumers available to them. Requires institutions to disclose to customers their policies on funds availability.
Fair and Accurate Credit Transaction Act of 2003
Enhances consumers� ability to combat identity theft, increases the accuracy of consumer reports, allows consumers to exercise greater control over the type and amount of marketing solicitations they receive, restricts the use and disclosure of sensitive medical information, and establishes uniform national standards in the regulation of consumer reporting. Amended the Fair Credit Reporting Act.
Fair Credit and Charge Card Disclosure Act of 1988
Requires that applications for credit cards that are sent through the mail, solicited by telephone, or made available to the public (for example, at counters in retail stores or through catalogs) contain information about key terms of the account. Amended the Truth in Lending Act.
Fair Credit Billing Act (1974)
Specifies how creditors must respond to billing complaints from consumers; imposes requirements to ensure that creditors handle accounts fairly and promptly. Applies primarily to revolving and credit card accounts (for example, store card and bank card accounts). Amended the Truth in Lending Act.
Fair Credit Reporting Act (1970)
Protects consumers against inaccurate or misleading information in credit files maintained by credit reporting agencies; requires credit reporting agencies to allow credit applicants to correct erroneous reports.
Fair Debt Collection Practices Act (1977)
Prohibits abusive debt-collection practices. Applies to banks that function as debt collectors for other entities.
Fair Housing Act (1968)
Prohibits discrimination in the extension of housing credit on the basis of race, color, religion, national origin, sex, handicap, or family status.
Federal Trade Commission Improvement Act (1980)
Authorizes the Federal Reserve to identify unfair or deceptive acts or practices by banks and to issue regulations to prohibit them. Using this authority, the Federal Reserve has adopted rules substantially similar to those adopted by the FTC that restrict certain practices in the collection of delinquent consumer debt (for example, practices related to late charges, responsibilities of cosigners, and wage assignments).
Flood Disaster Protection Act of 1973
Requires flood insurance on property in a flood hazard area that falls under the National Flood Insurance Program.
Gramm-Leach-Bliley Act (1999)
Regulation P — Privacy of Consumer Financial Information. Describes the conditions under which financial institutions may disclose nonpublic personal information about consumers to nonaffiliated third parties, provides a method for consumers to opt out of information sharing with nonaffiliated third parties, and requires financial institutions to notify consumers about their privacy policies and practices.
Regulation H — Consumer Protection in Sales of Insurance. Describes conditions for retail sales, solicitations, advertising, or offers of insurance products or annuities by state member banks or by others at an office of a bank. Prohibits coercion and misrepresentations and requires disclosures in connection with the initial purchase of an insurance product or annuity.
Home Equity Loan Consumer Protection Act of 1988
Requires creditors to provide consumers with detailed information about open-end credit plans secured by the consumer�s dwelling, including a brochure describing home equity loans in general. Also regulates advertising of home equity loans and restricts the terms of home equity loan plans.
Home Mortgage Disclosure Act of 1975
Requires mortgage lenders to annually disclose to the public data about the geographic distribution of their applications, originations, and purchases of home-purchase and home-improvement loans and refinancings. Requires lenders to report data on the ethnicity, race, sex, and income of applicants and borrowers, as well as pricing data on certain loans. Also directs the Federal Financial Institutions Examination Council, of which the Federal Reserve is a member, to make summaries of the data available to the public.
Home Ownership and Equity Protection Act of 1994
Provides additional disclosure requirements and substantive limitations on home-equity loans with rates or fees above a certain percentage or amount. Amended the Truth in Lending Act.
Homeowners Protection Act of 1998
Establishes rules for automatic termination and borrower cancellation of private mortgage insurance (PMI) on home mortgages.
Real Estate Settlement Procedures Act of 1974
Requires that the nature and costs of real estate settlements be disclosed to borrowers. Also protects borrowers against abusive practices, such as kickbacks, and limits the use of escrow accounts.
Right to Financial Privacy Act of 1978
Protects bank customers from the unlawful scrutiny of their financial records by federal agencies and specifies procedures that government authorities must follow when they seek information about a customer�s records from a financial institution.
Truth in Lending Act (1968)
Requires uniform methods for computing the cost of credit and for disclosing credit terms. Gives borrowers the right to cancel, within three days, certain loans secured by their residences. Prohibits the unsolicited issuance of credit cards and limits cardholder liability for unauthorized use. Also imposes limitations on home equity loans with rates or fees above a specified threshold.
Truth in Savings Act (1991)
Requires that depository institutions disclose certain information to depositors about their accounts–including the annual percentage yield, which must be calculated in a uniform manner–and prohibits certain methods of calculating interest. Regulates advertising of savings accounts.
Women�s Business Ownership Act of 1988
Extends to applicants for business credit certain protections afforded consumer credit applicants, such as the right to an explanation for credit denial. Amended the Equal Credit Opportunity Act.
Protecting consumers’ right to challenge discrimination
The Consumer Financial Protection Bureau (CFPB) is committed to ensuring fair, equitable, and nondiscriminatory access to credit for individuals and communities. The CFPB administers and enforces federal laws such as the Equal Credit Opportunity Act, a landmark civil rights law that protects people against discrimination in all aspects of credit transactions. Under the law, consumers targeted by race, religion, age, or any other prohibited basis with predatory lending products or practices also have the right to challenge that discrimination by bringing a lawsuit. Yet lenders engaged in discriminatory acts or practices sometimes unfairly try to make consumers sign away that right. Fortunately, many courts have rejected attempts to make people sign away crucial legal rights.
On Friday, the CFPB filed an amicus brief in the United States Court of Appeals for the Second Circuit to protect consumers’ ability to challenge discrimination. In this case, borrowers alleged that Emigrant Mortgage Company and Emigrant Bank targeted Black and Latino homeowners with abusive and predatory mortgage loans. Emigrant directed loans to people whose low credit scores indicated that they were at a relatively high risk of default. Further, unlike most other mortgage loans, once a borrower missed a single payment on Emigrant’s loans, a much higher interest rate kicked in and payments increased dramatically, making it highly unlikely that borrowers could ever catch up. Predictably, the default rate on Emigrant’s loans reached nearly 50 percent, well above industry standards.
A jury found that Emigrant violated the law, and the judge ordered Emigrant to pay compensatory damages. On appeal, Emigrant is now arguing that the borrowers should not have been able to bring their claims at all because too much time had elapsed since they received their mortgage loans. Further, Emigrant is arguing, among other things, that one family that was discriminated against should not be compensated because Emigrant required the family members to sign paperwork saying they “release and forever discharge Emigrant . . . from any and all claims” when the family needed to modify their mortgage.
That’s wrong, as the CFPB’s brief explains. The borrowers were entitled to bring their claims to court when they did because Emigrant concealed their discriminatory and predatory conduct. And the family that modified their mortgage cannot be bound by a contract to sign away their right to challenge Emigrant’s discrimination. Congress’s strong commitment to prohibiting discrimination in the credit markets would be undermined if courts did not allow consumers to challenge harmful conduct in these circumstances.
If you believe you have been affected by discrimination when applying for or modifying your mortgage loan, you can submit a complaint with the CFPB.
The case is Saint-Jean v. Emigrant Mortgage Company, No. 22-3094 (2d Cir.).
Topics
- • Fair lending
- • Discrimination
- • Mortgages
- • Homebuying
https://www.federalreserve.gov/pubs/complaints/laws.htmhttps://www.consumerfinance.gov/about-us/blog/protecting-consumers-right-to-challenge-discrimination/
