Know your consumer rights

Many people are struggling to pay their credit card bills in this tough economy. Because many turn to businesses offering debt relief services it has encouraged lawmakers to adopt stricter regulations of financial institutions and debt settlement companies to prevent consumer abuse. Now It’s important to than ever to know your consumer rights!

Make sure you stay informed about the following consumer protections, so you do not fall prey to unscrupulous financial practices.

FTC Rules to Protect Consumers in Credit Card Debt – In July 2010 the Federal Trade Commission announced amendments to the Telemarketing Sales Rule making it illegal for debt settlement companies to collect advance fees prior to settling, reducing or otherwise resolving a customer’s credit card or other unsecured debt. The new rules require a written agreement between the consumer and the creditor and the consumer has to make at least one payment to the creditor as a result of the agreement before fees can be charged by the settlement company. The rule also prohibits debt settlement companies from making false or unsubstantiated claims about their services and fully disclose certain information prior to the consumer signing up; such as how much it will cost, the negative consequences that could result, key information about dedicated escrow accounts and how long it will take the company to get results. However, these rules to for profit organization and non-profit organizations are exempt.

Credit Card Accountability Responsibility and Disclosure Act - There are a lot of great provisions of the new CARD Act, which went into effect in February 2010 - with the final provision implement in August. The following are some of the most helpful to consumers: Time to pay your bill is 21 days instead of 14. The payment date is the same date each month instead of a floating date. Card issuers can no longer change APR, fees, or finance charges on outstanding balances unless the rate you were give was an introductory rate (lasting for only a specific amount of time) or your rate was reduced during a short-term hardship arrangement. If there are any changes in your billing/finance charges the creditors must notify you 45 days prior to the change taking effect instead of 15 days. And you have the right to opt out. The creditor must post how long it will take you to get out of debt if you pay the minimum payment due. Fees for going over the credit card limit are no longer allowed unless you specifically authorized the credit card company to allow you to make purchases that put you over the limit. Credit card companies can no longer charge a fee for payment sent by mail, electronically, or phone payments unless you need the payment to be expedited to make the payment due date. Any payment made that is over the minimum required payment must be applied towards the balance with the highest interest rate. Credit card companies are not allowed to issue cards to consumers under the age of 21, unless they can prove they have the financial means to repay the debt or they have a cosigner.

Fair Debt Collection Practices Act – Creditors and collection agencies have rules governing their collection procedures both nationally through the Fair Debt Collection Practice Act (FDCPA) and locally through state laws. These laws govern several issues. They specify how and when and where a collector may contact you. The Federal Trade Commission (FTC) states that a collector may contact you by phone, fax, or mail. They can only contact you by phone between the hours of 8 a.m. and 9 p.m. Collectors may contact others associated with you such as friends, relatives, or your boss to leave a message, find out where you live, and obtain a phone number or find out where you work. They are prohibited from discussing the debt or amount of money owed. If they contact you at work and you advise them that you cannot receive such calls they must honor your request not to contact you at work.

If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a "debtor." If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a "debt collector."

You should know that in either situation, the FDCPA requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe. The following are questions commonly asked about your rights under the FDCPA.

SECTION 805 – COMMUNICATION IN CONNECTION WITH DEBT COLLECTION

• Collectors may only call after 8:00 a.m. and no later than 9:00 p.m. (in your time zone).
• Collectors cannot contact you once you notify them that you are being represented by an attorney.
• Collectors may not call a consumer’s place of employment, once the consumer advises that they are prohibited from receiving such calls.
• Collectors may not communicate account specifics with any person other than the consumer himself (unless authorized by the consumer or cosigner to do so). This includes all family members.

SECTION 806 – HARASSMENT OR ABUSE

• Collectors may not use threats of violence or other criminal means.
• Collectors may not use profanity.
• Collectors may not continuously call, annoy, abuse, or harass consumers.

SECTION 807 – FALSE OR MISLEADING REPRESENTATIONS

• Collectors may not use any false or deceptive or misleading representations.
• Collectors may not threaten to take any action that cannot legally be taken.
• Collectors may not give or threaten to give out false credit information.
• Collectors may not distribute any falsely written communication simulating any document authorized, issued or approved by any court, official, or agency of the United States or any states.
• Collectors may not use any name other than the true name of the collector’s business, company, or organization.
• Collectors may not falsely imply that they are employed by a consumer-reporting agency.

SECTION 808 – UNFAIR PRACTICES

• Collectors may not use unfair or unconscionable means to collect or attempt to collect any debt.
• Collectors cannot accept a check or other payment form from the consumer that is postdated by more than five days.
• Collectors may not solicit any postdated check for the purpose of threatening or instituting criminal prosecution.
• Collectors may not deposit or threaten to deposit any postdated check prior to the date on the check.
• Collectors may not cause charges to be made to the consumer for the price of communication.
• Collectors may not take or threaten to take non-judicial action to effect dispossession or disablement of property.
• Collectors may not communicate with a consumer by postcard.
• Collectors may not use any language or symbol other than the collector’s address and name on any mail sent to the consumer.

SECTION 809 – VALIDATION OF DEBTS

• Collectors must notify the consumer in writing within five (5) days, validating their debt.

SECTION 810 – MULTIPLE DEBTS

• If a consumer owes multiple debts to one creditor and makes a payment to the collector for one specific debt, the collector may not apply such payment to any disputed debt and MUST apply the payment as the consumer directs.

The Fair and Accurate Credit Transactions Act - The FACT Act helps to combat and reduce identity theft and protects the privacy of consumer financial information. It guarantees you a free copy of your credit report every 12 months from the three major credit reporting agencies. Additionally, it implements a fraud alert system to enable consumers to place alerts on their credit files if you think you have been the victim of identity theft. Also, Account numbers on credit card receipts are now required to be shortened - removing the consumer's name and full credit card account number.