Consumer rights sound like it would be a given in America, but it wasn’t until the 1960’s that the government first acted to protect consumers.
It started with the Consumer Credit Protection Act of 1968, when Congress moved to shield consumers and their financial records from abuse. In the years following, other laws refined consumer rights, spelling out how the government can access bank customers’ information, how banks treat borrowers and the way banks handle customer deposits.
It all came to a head after the Great Recession in 2008, and out of that, the Consumer Financial Protection Bureau was formed, a new government agency dedicated to protecting consumers.
Today, there are countless laws, acts and regulations designed to protect consumers. The sheer number of laws can be overwhelming, but it is important that consumers understand their basic rights, so they can identify when those rights have been violated.
There are dozens of laws and acts that clearly define consumer rights, but they can be broadly explained by these four basic rights:
Consumers have the right to be safe while using the product they purchased. This was put into law in 1972 and is enforced by the Consumer Protection Safety Commission, which regulates testing of products and created standards and warning labels.
An informed consumer will be able to make safer decisions. This right requires producers to provide accurate and truthful information in advertising, especially when it comes to health and medicine.
This is the right to choose between alternatives products. Anti-trust and unfair competition laws broadly fall into this category.
This is a promise by the government that they will listen to your complaint and act on it. You can submit a complaint to the Consumer Financial Protection Bureau or the U.S. Attorney General, Federal Trade Commission and Better Business Bureau.
The federal Right to Financial Privacy Act limits government access to personal financial records. Congress passed the law, which protects the confidentiality of personal financial records, in response to the 1976 Supreme Court’s United States v. Miller ruling which found that the consumer bank account records aren’t subject to constitutional privacy protection.
The 1978 law extended Fourth Amendment privacy protection to such information.
under the Financial Privacy Act, government officials normally must get written consent, or obtain a subpoena or search warrant in order to peruse your financial records. Before authorized searches can take place, investigators must serve notice on the account holder and wait 10 days for a response, or 14 days from the date a notification was mailed.
Importantly, the law only applies to the federal government and its officers, agents, agencies and departments. It doesn’t govern local or state governments, nor does it regulate the activities of private businesses.
The act identifies the sort of financial institutions it covers. Not only does it cover accounts held at traditional banks, but it pertains to records held by merchant credit-issuing entities. So, department store and gas station credit card accounts fall under the act’s regulations.
The law’s protections are limited to individuals and partnerships of five or fewer people. Companies and large groups like trade associations and labor unions aren’t covered.
The law does not apply if a supervisory or consumer rights agency needs records to investigate consumer complaints. In these instances, the records are used to scrutinize the financial institution and not you.
The Federal Reserve Board adopted the Credit Practices Rule in 1985 to protect the rights of consumers in debt. It applies to consumer credit contracts made with creditors such as car dealers, department stores and financing companies. It doesn’t apply to real estate purchases, bank loans or contracts with loan associations, yet it covers mobile homes and houseboats.
The lender is also required notify any cosigners with an explanation of what taking on the debt entails. The notification must be provided in a separate document or in a credit obligation prior to the issuance of the loan or credit line.
The Expedited Funds Availability Act, passed in 1987 and amended in 2010, spells out how long you must wait to withdraw money after depositing it in a bank account.
A 2010 amendment to the act detailed when certain amounts of a deposit are available to an account holder.
Deposits of cash, wire transfers and some government checks are available for withdrawal on next business day. So are checks drawn on the same institution where they are deposited and items like cashier’s checks, certified checks and teller’s checks.
So, if you make a deposit on Monday, the funds must be available on Tuesday. A deposit made during a weekend is treated as if it were made on Monday and is also available Tuesday.
In addition, up to $100 of the total of all checks deposited by one customer on a single business day will be available the next business day.
EFAA also outlines four situations in which banks are allowed to place a hold on a deposit:
Banks are required to make the first $200 of a deposit available on the next business day, the next $600 available on the second business day and the rest needs to be available on the third business day following the deposit.
This gives banks more time for deposits over $5,000. The rules are the same as the statutory for the first two days, but on the third business day $4,800 needs to be available and the rest of the deposit becomes available seven days after the deposit.
Accounts that are less than 30 days old can have a nine-day hold on deposits.
This is used for overdrawn accounts, if the bank suspects the check might be fraudulent or if the computer system goes down. Exception holds are lifted seven days after the deposit.
If a bank fails to follow the rules, it can be sued. A one-year limitation period applies, and a bank cannot be held civilly liable for a true error. Liability can’t exceed the amount of the check that gave rise to a loss. In some cases, other damages might apply.
As mentioned, many laws have been passed to look out for the rights of consumers. Here is a Top 10 list of those that might apply to you.
Debt collection agencies are banned from threatening, harassing and inappropriately contacting someone that owes money.
Lenders are regulated to ensure they adhere to standardized practices that are fair and honest. For example, the act deals with credit reports and other aspects of debt and credit.
Banks and credit card companies are required to make credit equally available to all credit-worthy applicants regardless of race, color, religion, national origin, sex, marital status, age or because that person receives public assistance.
Lenders are required to give information on the true cost of credit and explain the terms in a way that is easy to understand.
Provides guidelines to resolve disputes over billing statements, unauthorized purchases, errors with the date or amount charged, goods or services that were not fulfilled and other issues.
Gives consumers the right to one free credit report from each of the three main credit reporting agencies each year.
This applied the same protections given to traditional means of purchasing to the new forms of transactions that used new technologies.
Ensures that the information gathered and distributed by credit reporting agencies is fair and accurate.
Companies that claim they can repair your credit report have to do so in an honest way. They have to be truthful in the services they say they can provide consumers as well as the information they give to credit bureaus.
Also referred to as the Credit Card Bill of Rights, this law makes sure credit card companies provide fair interest rates and penalties and transparent notifications.
These are just a few of the provisions relating to consumer financial rights. To learn more about your credit and consumer rights, read about the Federal Trade Commission, or visit their website.