The consumer credit protection act was passed in 1969 to protect the consumer against the lenders such as banks, credit card companies, etc. It is also known as Act 172. The act mandates the lenders to disclose their terms and conditions more simply, enabling the consumer to understand the cost of borrowing the money. The Consumer credit protection act also includes the Truth in lending act, fair credit reporting act, and fair debt collection practices act.
The act has been enacted to provide detailed and accurate information to the borrower regarding the financial cost and charges which the lenders charge. It also protects the consumer from getting trapped under hidden charges, which are not disclosed by the lenders who misrepresent credit costs.
Understanding the Consumer Credit Protection Act (Act 172)
The Consumer credit protection act helps regulate the customer’s financial information in a fair based representation and avoids discrimination by creditors. It also creates transparency between the borrowers regarding the terms and conditions of the loans, irrespective of the consumer’s knowledge regarding finance or banking. It demands the financial lenders to explain their terms and conditions more straightforwardly than any non-finance consumers can understand. The act develops varieties of protection laws for the consumer regarding lending, collection, and sharing of consumer’s past credit activities. The CCPA contains several rules that address specific lending process issues, data collection of the consumer’s credit borrowing, etc.
Major provisions developed are as follows.
Truth in Lending Act:
This act protects the consumers from misleading advertisements and unfair hidden costs charged by lenders. Under the act, lenders are required to provide the consumers with the total cost and hidden charges of the loan through which they can compare the available options in the market and choose the best deal as per their requirements. The act prohibits the creditors to falsely advertise and encourage profits based on the expense of the consumers. It should not manipulate the information by not disclosing the facts and charges about the loans. The consumer gets advised to read all the documentation carefully before signing the papers and then regretting the decision. The act also provides consumers with a three-day window to back out of a loan even after signing the paperwork at the closing.
Title III of the CCPA specifies the subject of wage garnishment for the employers. It restricts the garnishment to 25% of the employee’s income after deducting all the mandatory taxes. However, it does allow up to 50% to 60% garnishments for the past due to taxes and child support. The CCPA has made it compulsory for the creditor to obtain a court order to initiate the wage garnishments. For more information on Act 172, [click on the link].
Fair Credit Reporting Act:
The Fair Credit Reporting Act regulates how credit-reporting agencies use consumers’ personal information. Under this law, credit-reporting agencies must tell consumers when an organization uses data from their file to deny credit or employment. They must correct inaccurate information and report only current information. It also gives consumers the right to verify their files and protect their data.
The fair reporting act allows the consumer to cross-verify their credit report data to ensure that represented data of its financial history is accurate and somewhat displayed. If any information is inaccurate, consumers are allowed to raise a dispute against it.
What does complying with consumer protection regulations do?
The consumer protection regulations help to restrict unfair, misleading, and fraudulent business practices by collecting reports and conducting investigations. If the companies are found guilty, the study revolves around suing them and compensating them against their losses. It helps develop fair market practices and values, educate the consumers about their rights and prevent unfair business processes for more information on what complying with consumer protection regulations do [click on the link].
Since the enactment of act 172, several times have been amended to add several provisions and update the system as per the market scenario, such as debt collection, credit report, leasing, and fund transfer through electronic medium. It was mandatory to update the act and alter the requirements through which the system unmanipulated efficiently and ultimately protected the consumer’s rights from the lenders.