Federal laws exist to protect consumers from various business practices and transactions. The government regulates the way businesses advertise and sell products and services. The laws and regulations also cover product branding, the quality of food and other products. These laws can also protect consumers by enforcing sound banking and lending practices.
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Under these laws, the buyer beware principle is exposed to address various aspects of consumer protection. The focus of these laws shifts some of the burden from the consumer towards businesses. In addition to federal laws, some states also regulate business practices and transactions through consumer protection agencies.
For nearly 40 years, several different laws have been enacted to protect consumer rights. The Federal Truth in Lending Act regulates the credit and lending industries. The Fair Credit Reporting Act (FCRA) was enacted to regulate consumer credit reporting agencies. The rise in identity theft prompted the passage of the Identity Theft and Assumption Deterrence Act in 1998.
In addition to regulating business practices and transactions, these laws also pursue lawsuits on behalf of consumers. Typical lawsuits may include identity theft, unlawful credit practices and debt collection violations.
Federal Truth in Lending Act
As part of the Consumer Credit Protection Act (CCPA), the federal Truth in Lending Act is intended to protect consumers in transactions with credit card companies and lending institutions.
Essentially, businesses are required to disclose specific information about its products and services to consumers prior to acceptance of the credit. This information includes the total cost to the consumer, the annual percentage rate (APR) and the loan terms. Consumers must have access to this information visibly and not hidden. The Act also regulates what credit and lending businesses can advertise about the benefits of various financial products offered.
Fair Credit Reporting Act
Passed in 1970, the Fair Credit Reporting Act regulates how consumer information is collected, disseminated and used in the recovery of unpaid bills. The goal is to maintain consumer privacy and accuracy of the information in a consumer credit report. In 1978, the Fair Debt Collection Practices Act (FDCPA) was added to eliminate abusive collection practices. Guidelines were created for the way debt collectors conduct business without violating consumer rights.
Identity Theft and Assumption Deterrence Act
The Identify Theft and Assumption Deterrence Act was enacted in 1998, making identity theft a federal crime. Violators can face up to 15 years in prison and up to $250,000 in fines. If a person is convicted, the victim can receive restitution. Before this law was passed, the credit grantors were considered the only victims of identity theft.
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