Although most of us learned the valuable lesson of "Caveat Emptor" (Buyer Beware) when we purchased our first sea monkey family, the brutal truth is that we are still often the victims of unfair business practices.
In the last three decades there has been an avalanche of legislation by both state legislatures and Congress in the areas of consumer transactions, creditor/debtor matters and bankruptcy. The courts have interpreted these laws, at least until very recently, very liberally, thereby greatly expanding the rights of individuals in their dealings with retail sellers, mortgage lenders and finance companies. Despite the fact that these laws have a tremendous impact on your everyday dealings, surprisingly few consumers are familiar with them.
We hope that the questions and answers presented here will assist you in familiarizing yourself with the issues and terms concerning consumer protection laws. While the material below attempts to answer common questions in this area, State and local laws may significantly modify the facts set forth. Because all legal problems are unique, nothing provided here is a substitute for the advice of competent counsel. We strongly urge you to consult with an attorney licensed to practice in your state about any particular legal problem you may have.
Perhaps the Act with the most pervasive effect on consumer matters is the Federal Truth in Lending Act, found in Volume 15 of the United States Code beginning at section 1601. This Act is designed to ensure full disclosure of information in credit sales, credit card transactions, revolving loan accounts, and mortgages. The Act requires that the lender provide you with certain notices either before the agreement is made or before the first transaction is completed. You must be fully advised, in clear terms, of the total number of payments to be made, a schedule of repayments, the amount financed, finance charge, annual percentage rate, a description of collateral or security used for the loan, default charges, prepayment charges, rights on non-payment, and insurance information.
The Truth in Lending Act also applies to credit card transactions. In the event your credit card is lost or stolen, you are only responsible for unauthorized transactions until you notify the card issuer of the loss, but not more than $50.00 in unauthorized transactions. In addition, if you purchase goods or services in excess of $50 with your credit card in your home state or within 100 miles of your home that you believe are defective, you may assert their defective nature as a defense against the credit card issuer in the same manner as you could against the seller of the goods or provider of the service, as long as you first attempted to resolve the dispute with the person honoring the credit card.
Section 1640 of the Truth in Lending Act provides that an individual may recover any actual damages sustained as a result of the creditor's failure to make the required disclosure plus twice the amount of any finance charge, but not less than $100 or more than $1,000. The Act further provides that if you are successful, the court may award you reasonable attorney's fees and costs.
Section 1666 of the Truth in Lending Act sets forth the procedures you must follow when you think there is an error on your bill. You must notify the credit card company, in writing, within 60 days of the time you receive your billing statement of the error at the address provided on your bill for this purpose. Your notice to the credit card company must NOT be on the payment stub and must contain the following: your name, account number, a statement that the bill contains an error, the amount of the error, and the reason you believe the bill is in error. The creditor must acknowledge your claim within 30 days and attempt to resolve the dispute within 90 days. While this procedure is taking place, the creditor may take no action to collect the disputed debt, close the account or report the account to a credit reporting company. However, you must continue to pay all undisputed charges. If the creditor does not follow these procedures, it may forfeit its right to collect finance charges on the disputed charge and may face additional penalties for violating the Act.
The Federal Fair Credit Reporting Act, found in Volume 15 of the United States Code beginning at Section 1681, regulates the use of consumer credit reports and sets forth procedures for correcting inaccurate credit reports. Generally the Act provides that a credit report cannot contain adverse information more than 7 years old, with the exception of a bankruptcy proceeding. A credit report may contain bankruptcy information for up to 10 years following the conclusion of the proceedings.
You may obtain a copy of your credit report at no charge if you are denied credit as a result of information in the credit report. Within 30 days of receiving notice of the denial of credit, you must request a copy of your credit report from the credit agency identified in the denial notice. In other circumstances you may be charged a reasonable fee if you request a copy of your credit report. Copies are also available online.
If you believe that there is a mistake on your credit report advise the credit reporting agency of the information you believe to be in error. The credit agency is obligated to reinvestigate the matters in dispute. If the agency cannot verify the information on the report, it must delete it. If the credit agency will not change the information, you are permitted to insert in the credit report a brief statement (usually not more than 100 words) detailing your side of the dispute. If the credit agency deletes incorrect information or you have inserted into the credit report your side of a dispute, you may have the credit agency send an updated credit report to any person or business that denied you credit during the preceding 6 months.
You should be aware that the Internet and e-mail are spreading credit-repair scams far and fast. If you have credit problems or recently filed for bankruptcy, you may have been contacted by a “service” to help repair your credit fees. These companies are claiming that they can help consumers create new credit histories by using IRS-issued identification numbers when applying for credit. You will be committing federal, and possibly state, felonies by substituting these identification numbers for your social security number in a credit application. If you hear from a potential credit-repair con, file a complaint through the FTC’s web site (www.ftc.gov) or by writing to Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, D.C. 20580.
If the credit agency fails to follow the procedures set forth in the Act, you may recover any actual damages you sustain and your attorney's fees and costs. If the credit agency's actions are found to be willful, you may also recover punitive damages. Statutory damages of $100.00 to $1,000.00 will also be available against anyone who uses a credit report for an improper purpose, and against banks, credit card companies and other businesses that report information to credit bureaus if they don't respond adequately to customer complaints.
Ten common consumer law violations which lead to debtors recovering significant amounts from their creditors and creditor representatives are as follows:
· Attorneys letting collectors sign their name to collection letters without first adequately reviewing the debtor's file. Violations can result in the collection attorney being liable for up to $1,000.00 plus actual damages and attorney's fees.
· Credit bureaus' failure to prevent a recurring error in the consumer's file. Violations can result in actual and punitive damages and attorney's fees.
· Loan flipping and rip-off second mortgages. Consumer attorneys can find ways to stop foreclosures, cancel loans and recover hefty damages and attorney fees for these and other examples of lender overreaching and "predatory lending."
· Sellers jacking up the cash price for high risk debtors. Violations can lead to $1,000.00 or more in statutory damages, actual damages and attorney fees.
· Collectors pursuing collection contacts, lawsuits, garnishments, or repossessions despite the bankruptcy stay or discharge. Violations can result in actual and punitive damages as well as attorney fees.
· Car lessors withholding interest on security deposits or mis-disclosing early termination penalties, purchase options, trade-ins, taxes, or warranties. Violations can lead to $1,000 in statutory damages, actual damages and attorney fees.
· Faulty notice of or commercially unreasonable conduct of a repossession sale. This can result in thousands of dollars for the consumer and in many cases, attorney fees.
· Used car sales involving reset odometers, salvaged vehicles or lemon laundering. Violations can result in $1,500 minimum damages, treble damages, punitive damages and attorney fees.
· Contracts providing that a lease, future service contract, or other transaction cannot be canceled or that a dealer is not subject to the oral promises of its employees. This often leads to recoveries of multiple, statutory or punitive damages and attorney fees.
· Requiring a spouse to co-sign a loan. Violations can lead to actual damages (such as the amount of the co-signer's obligation), punitive damages, and attorney fees.
The above information summarizes some of the important provisions of some of the most important Federal laws designed to protect consumers. There are other laws, both federal and state, that offer additional protections to consumers. If you believe you have been subject to one or more of the above-mentioned consumer violations, you should contact an attorney immediately.
There are many governmental agencies that protect and enforce your rights as a consumer, wage earner and citizen. Look in the "Guide to Human Services" in the blue pages of your telephone directory for a list of the agencies offering assistance.
For your information, the following booklets are available free from the Attorney General's Public Protection Division by telephone request at 1-800-441-2555: "Telemarketing Fraud," "Credit Repair Scams," "Consumer Protection Booklet," "The Do Not Call Booklet," "A Consumer Guide for Seniors: How to avoid Scams and Fraud," "Consumer Privacy: Protecting Your Personal Information" and "Credit Advice for Students."
You should take the following steps when purchasing goods over the Internet: buy from a company you know, pay with a credit card over a secure connection, and research the company thoroughly before you buy. If you purchase something "cheap" because it seems like a great deal, you're probably taking a risk.
According to the National Fraud Information Center and Internet Fraud Watch Programs at the National Consumers League, there are two problems with purchasing goods over the Internet. First, if you have a problem with what you purchased, you're probably dealing with someone far away, making it almost impossible to find the culprit, and secondly, you might be put on a "suckers list" and be exposed to solicitations for big-ticket swindles.
If you don't receive the goods ordered, report the scammer to www.fraud.org or call Internet Fraud Watch at 800-876-7060.
DESSEN, MOSES & ROSSITTO is happy to assist you in any consumer rights matter that arises in either Pennsylvania or New Jersey, the two states in which our attorneys routinely practice. If you have other questions or comments about consumer rights or any other area in which we practice, please send us an E-mail message with your questions or comments and we will be happy to try to assist you.
LINKS TO OTHER INTERESTING INFO
Better Business Bureau
Center for Debt Management
Consumer Counseling Centers of America
Consumer Law Page
Credit Counseling Centers of America
Fair Credit Reporting Act
Fair Debt Collection Practices Act
Federal Rules of Civil Procedure
Federal Rules of Evidence
Federal Trade Commission (FTC)
Privacy Rights Clearinghouse
Truth in Lending Act
Uniform Commercial Code
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