Credit & Debt; Credit problems; credit protection laws; credit reports

1.       Introduce the topic of debt collection
protection by showing the brief FTC video “Dealing with Debt Collectors.”

Video: Dealing with Debt Collectors

http://www.ftc.gov/multimedia/video/credit/debt/debt-collection.shtm

2.       Review the primary intent of the Fair
Debt Collection Practices Act.

a) A
debt collector may contact you in person, by mail, telephone, telegram, or fax,
but may not contact you at inconvenient times or places.  For example, before 8:00 am or after 9:00 pm,
unless you agree.

b) A
debt collector may not contact you at work if the collector is aware that your
employer prohibits it.

c) If
an attorney is representing you about the debt, the debt collector must contact
the attorney, rather than you. If you don’t have an attorney, a collector may
contact other people only to find out your address, your phone number, and
where you work.

d) A
debt collector may not harass, oppress, or abuse you or any third parties they
contact about you.

e) A
debt collector may not lie or mislead anyone when collecting a debt.

3.       Discuss the rationale for these consumer
protections.  What are the possible
consequences if debt collectors were allowed to use whatever methods they want?

The
following is copied from Section 802 of the Fair Debt Collection Practices   Act.  It
is the rationale developed by Congress for the law.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

15 USC 1692 § 802. Congressional findings and declaration of
purpose

Enacted:
September 20, 1977

a)
There is abundant evidence of the use of abusive, decep­tive, and unfair debt
collection practices by many debt collectors. Abusive debt collection practices
contribute to the number of personal bankruptcies, to marital instability, to
the loss of jobs, and to invasions of individual privacy.

b)
Existing laws and procedures for redressing these injuries are inadequate to
protect consumers.

c)
Means other than misrepresentation or other abusive debt collection practices
are available for the effective collec­tion of debts.

d)
Abusive debt collection practices are carried on to a sub­stantial extent in
interstate commerce and through means and instrumentalities of such commerce.
Even where abusive debt collection practices are purely intrastate in
character, they nevertheless directly affect interstate com­merce.

e)
It is the purpose of this title to eliminate abusive debt col­lection practices
by debt collectors, to insure that those debt collectors who refrain from using
abusive debt col­lection practices are not competitively disadvantaged, and to
promote consistent State action to protect consumers against debt collection
abuses.

4.       Ask students to suggest what penalty or
punishment should be used when debt collectors violate the fair debt
collections law.

15 USC 1692 § 813 Civil Liability (pages 13-14)

Except as otherwise provided by
this section, any debt col­lector who fails to comply with any provision of
this title with respect to any person is liable to such person in an amount
equal to the sum of—

(1)      any actual damage sustained by such person
as a result of such failure;

(2)      (A) in the case of any action by an
individual, such additional damages as the   court
may allow, but not exceeding $1,000; or

(B) in the case of a class action,

(i) such amount for each
named plaintiff as could be recovered under subparagraph
(A), and

(ii) such amount as the court
may allow for all other class members, without regard to a minimum individual
recovery, not to exceed the lesser of
$500,000 or 1 per centum of the net worth of the debt collector; and   

NOTE: 
In addition, the law allows for administrative (legal) enforcement and
penalties as provided by several Federal Trade Commission enforcement laws.

5.       Conclude:  Review the key provisions of the Fair Debt
Collection Practices Act.

1.         Ask:  When you purchase something and something goes wrong or you are not treated fairly, what do you expect?   Do you have rights?  What are they?

Elicit some discussion of the ways consumers are protected by federal, state and    local laws.  Right to return goods, safety, advertised prices, no hidden costs, etc.

2.         Explain: When you use a credit card or sign a credit agreement, you are also protected by a variety of laws.

Ask: Why do we need laws to protect the rights of people who use credit?

Discuss possible things that sales people or creditors might do that are not fair or abusive to consumers?  Suggest: misleading credit costs, hidden costs, unfair rules, abusive collections practices, etc.   For some ideas for this discussion, see the article at this “Consumer Union” web site: http://www.consumersunion.org/pub/core_financial_services/004040.html

3.         Explain:  The federal government is the primary level of government involved in protecting consumer credit.  Most of this activity crosses state lines and, thus, is under federal jurisdiction.  Also, federal government agencies are the primary regulators of the financial institutions involved in credit.

Use Handout 1 or go to:  http://www.federalreserve.gov/creditcard/regs.html 

Quickly review the major consumer credit protection laws.  Be sure to specifically review the newest laws that were passed in response to the 2008-2009 credit crisis.

"What You Need to Know: New Credit Card Rules Effective Feb. 22" (2010)

"What You Need to Know: New Credit Card Rules Effective Aug. 22" (2010)

4.         Assign one law to each small group of students.  Students can review the information about the law and summarize it for the other students.  Use Handout 2 for the summaries.

Students will report on:

Name of the law____________

Year enacted______________

What problem(s) does the law intend to prevent?

How does the law protect credit users?

What are the consumers’ responsibilities?

5.         Conclude: Review some of the reasons why credit providers and collectors should be regulated.

Discuss some strategies consumer can take to protect themselves from credit problems.  For discussion ideas, go to this site: “Getting the Most from Your Credit Card,” http://www.federalreserve.gov/consumerinfo/fivetips_creditcard.htm.

Other credit card and consumer credit protection links (Federal Reserve System):

Credit Glossary: http://www.federalreserve.gov/creditcard/glossary.html

Interest Rates: http://www.federalreserve.gov/creditcard/rates.html

Credit Card Option: http://www.federalreserve.gov/creditcard/rates.html

Credit Card Fees: http://www.federalreserve.gov/creditcard/fees.html

Lost or Stolen Cards: http://www.federalreserve.gov/creditcard/lost.html

Billing Errors: http://www.federalreserve.gov/creditcard/errors.html

Credit Card Complaints: http://www.federalreserve.gov/creditcard/complaints.html

Managing Your Credit: http://www.federalreserve.gov/creditcard/manage.html