consumer credit
Consumer credit refers to the ability of a consumer to access a loan. The most common form of credit used by consumers 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. For example, the Uniform Consumer Credit Code (UCCC) has been adopted as law in eleven states and Guam. Its purpose is to protect consumers obtaining credit transactions and ensure that adequate credit is available. To do this, the UCCC includes provisions outlawing waiving rights through contracts and sets caps on interest rates.
In 1968, Congress passed the Consumer Credit Protection Act to further regulate the consumer credit industry. This act requires loan providers to explain financial terms to consumers, restricts the garnishing of wages, prohibits discrimination on the basis of sex or marital status, and established the National Commission on Consumer Finance to investigate the consumer finance industry. While this commission has since disbanded, credit card companies and credit reporting agencies are still regulated by the Act.
In May 2009, President Obama signed into law the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act. This statute even further constrained the practices of financial institutions that issue consumer credit cards. These new regulations include bans on practices such as charging interest on balances that have already been paid off, hiking interest rates without notice, and marketing towards college students. Additionally, the act requires interest rates on consumer credit instruments to remain static for at least one year after the consumer obtains it. Most notably, however, the CARD act contains provisions regulating the use of credit default swaps and increased penalties for noncompliance with federal credit regulations.
Federal Material
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
- U.S. Constitution
Federal Agency Regulations
- Code of Federal Regulations: 12 C.F.R. – Banks and Banking
State Material
State Statutes
- 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.
Additional Resources
- Consumer Finance Protection Bureau
- U.S. Federal Trade Commission
- National Foundation for Credit Counseling
- Consumer Credit Guide
- 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
[Last reviewed in July of 2022 by the Wex Definitions Team ]
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What laws does the CFPB enforce?
The CFPB enforces a number of consumer financial protection laws and a variety of rules, orders, standards and prohibitions prescribed by the CFPB and certain rules issued by the Federal Trade Commission.
Some of the laws the CFPB enforces include:
- Alternative Mortgage Transaction Parity Act of 1982 (12 U.S.C. 3801 et seq.);
- Consumer Financial Protection Act (Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act) (12 U.S.C. 5481 et seq.)
- Consumer Leasing Act of 1976 (15 U.S.C. 1667 et seq.)
- Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.), except with respect to Section 920 of that Act
- Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.)
- Fair Credit Billing Act (15 U.S.C. 1666 et seq.)
- Fair Credit Reporting Act (15 U.S.C. 1681et seq.), except with respect to Sections 615(e) and 628 of that Act
- Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.)
- Specified Rules under the Federal Trade Commission Act
- Federal Deposit Insurance Act, Section 43 (12 U.S.C. 1831t(b)–(f))
- Gramm-Leach-Bliley Act of 2009, Sections 502 through 509 [Privacy of Consumer Financial Information] (15 U.S.C. 6802–6809) except for Section 505 as it applies to Section 501(b)
- Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.)
- Homeowners Protection Act of 1998 (12 U.S.C. 4901 et seq.)
- Home Ownership and Equity Protection Act of 1994 (15 U.S.C. 1601 note)
- Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701)
- Military Lending Act (10 U.S.C. 1987)
- Omnibus Appropriations Act of 2009, Section 626 (12 U.S.C. 5538)
- Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.)
- S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.)
- Truth in Lending Act (15 U.S.C. 1601 et seq.)
- Truth in Savings Act (12 U.S.C. 4301 et seq.)
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Page last modified Dec. 15, 2021 @ 09:28 AM EST
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We’re the Consumer Financial Protection Bureau (CFPB), a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.
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The content on this page provides general consumer information. It is not legal advice or regulatory guidance. The CFPB updates this information periodically. This information may include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be other resources that also serve your needs.
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