According to the Federal Trade Commission (FTC), in 2019, United States consumers reported losing $1.8 billion due to consumer fraud. That number almost doubled in the next year with a reported loss of $3.3 billion in 2020. Most of the fraud involved imposter scams ($1.2 billion) with online shopping creating the next biggest fraud category ($246 million). With so many people falling prey to consumer fraud, and to help educate and empower consumers, the team at Schlanger Law Group created this consumer protection law outline.
Our mission is to provide basic information about five key federal consumer statutes so you will recognize illegal situations when they occur and know where to turn. Our law practice is dedicated to fighting for consumers by holding credit reporting agencies, creditors, and debt collectors accountable for violating these and other federal and state consumer protection laws.
Why Did We Create a Consumer Protection Law Outline?
Until the middle of the 20th century, there was little protection for a consumer dealing with a large bank or powerful corporation that engaged in self-serving practices.
In the past several decades, Congress has passed numerous laws aimed at protecting consumers in a wide variety of contexts. Here, we focus on federal laws that protect against inaccurate credit reporting, unauthorized credit card and bank charges, predatory lending, and unfair and deceptive debt collection practices.
Consumers should be aware of these detailed acts, their legal protections, the parties and types of situations covered, certain time frames that must be followed, and the available remedies.
However, these laws are complicated and can be difficult for non-lawyers to understand. In fact, many lawyers who don’t focus on consumer protection law are not aware of the protections and remedies available. Overall, for answers to specific questions related to your circumstances, it’s best to speak with an experienced consumer fraud lawyer.
Top 5 Consumer Protection Acts You Should Know
Below, we review the FCRA, FCBA, TILA, EFTA, and FDCPA, summarizing what types of situations are covered, who is covered, and what remedies are potentially available.
The Fair Credit Reporting Act (FCRA):
This act addresses consumer information collected by credit reporting agencies (CRAs) from creditors that deal directly with the consumer. The FCRA includes rules about how CRAs and reporting creditors must respond when a consumer notifies them about errors in their credit reports.
- Cases that fall under the FCRA involve a consumer, one or more credit reporting agencies, and the creditor(s) that supplied information to the reporting agency.
- To receive protection under the FCRA, a consumer who finds an error in their credit report must typically notify the CRA and creditor that supplied the erroneous information.
- The CRA and creditor must investigate the inaccuracies, and they have a certain timeframe to report their findings and correct any information they determine is incorrect.
- If the CRA or the creditor does not conduct a reasonable investigation, the consumer is entitled to actual damages (including not only out-of-pocket expenses, but also damage to credit, and emotional distress caused by the misconduct), statutory damages from $100 to $1,000 if they can prove the violations were willful, as well as punitive damages under certain circumstances. The offending CRA and/or creditor will also be responsible for paying the prevailing consumer’s attorney’s fees and costs.
- FCRA claims must generally be brought within two years of the violation, but the rules regarding the FCRA’s statute of limitations are complicated.
The Fair Credit Billing Act (FCBA):
This act comes into play when a consumer discovers an error in their credit card statement or other consumer billing problem. The FCBA requires creditors to acknowledge consumer complaints and investigate the alleged errors.
- Usually, this act covers consumers who have disputed unauthorized charges or incorrect amounts found on their credit card statements.
- Once the consumer notifies the creditor about billing problems (which must typically be brought to the creditor’s attention within 60 days of when they appear on a monthly statement), the creditor must send a written acknowledgment and investigate the situation.
- The creditor cannot take any action that would negatively affect the consumer’s credit during the investigation, among other consumer protections.
- The creditor must take appropriate action to clear unauthorized or erroneous transactions unless it finds no error after a reasonable investigation.
- If a creditor violates the FCBA, the consumer is entitled to their actual out-of-pocket expenses, statutory damages up to $5,000, and possibly punitive damages (in cases involving a pattern and practice of violations). The offending creditor will also be responsible for paying the prevailing consumer’s attorney’s fees and costs.
- FCBA claims are subject to a one-year statute of limitations.
The Truth in Lending Act (TILA):
This act is particularly complex and wide-ranging but provides two basic types of protection that are commonly useful to consumers.
- First, Section 1643 of TILA bars credit card companies from billing consumers for unauthorized charges once the charge has been disputed by the account holder.
- Second, TILA requires that lenders and other creditors accurately disclose in detail the costs of borrowing and other loan-related information (for example, the amount financed, the finance charge, the APR, the total amount paid, etc.).
- These disclosure provisions apply to a wide range of consumer financing, ranging from home loans to auto loans to payment plans for phones and computers. Because predatory lenders (including, for example, dishonest auto finance companies and dealerships) often hide charges from the borrower, TILA’s disclosure requirements are a surprisingly powerful tool to challenge loan fraud.
- Consumers who prove a TILA violation can recover their actual damages, statutory damages up to $5,000 depending on the type of loan involved, and payment of their attorney’s fees and costs.
- TILA claims are subject to a one-year statute of limitations.
Electronic Fund Transfer Act (EFTA):
With the ever-increasing prevalence of electronic banking, and digital bill pay (including the use of debit cards, ACH transfers, etc.) the EFTA’s protections – which limit the consumers’ potential losses resulting from unauthorized electronic transfers involving debit card theft, fraudulent ACH transfers, identity theft, and more – have become critical.
- This act provides consumers with a way to dispute unauthorized electronic transfers and limit their monetary loss if they act quickly once they discover a problem.
- When a consumer notifies a financial institution about an unauthorized transfer, the institution must investigate the problem, report the findings, and disclose the information relied upon during the investigation. If there was an unauthorized charge and it was reportedly quickly, the institution is generally required to refund the stolen funds. Different levels of protection apply depending on the speed with which the consumer notifies the bank or financial institution. Consumers who wait more than 60 days before reporting a transaction risk being responsible for all subsequent transactions without any liability cap.
- If a consumer can prove an EFTA violation, they can request actual damages, statutory damages from $100 to $1,000, treble damages (an amount equal to three times actual damages), attorney’s fees, and costs.
- EFTA claims are subject to a one-year statute of limitations.
Fair Debt Collection Practices Act (FDCPA):
This law was enacted to prevent debt collectors from using deceptive, abusive, and harassing tactics. The statute applies to third-party debt collectors and debt buying companies, but not to original creditors. Also, it only applies to consumer debt (not business debt).
- Debt collectors cannot use unfair, deceptive, or abusive actions while collecting a debt. For example, they cannot misstate the true amount owed, misrepresent the consumer’s legal rights or the nature and status of the debt, call excessively, use profanity, threaten to have the consumer arrested, or pretend to be a government agency.
- The FDCPA also provides detailed disclosure requirements covering what information must be provided to consumers and within what time frames.
- Because debt collectors often collect debts by sending form letters to a large group of consumers, FDCPA violations are commonly the basis for class actions lawsuits where a suit is brought on behalf of a large group of consumers who have all been subjected to the same misconduct.
- Violations of the FDCPA entitle the consumer to actual damages statutory damages up to $1,000, attorney’s fees, and costs.
The five laws listed above also have provisions regarding class action litigation, including caps on the maximum amount of statutory damages that can be recovered in a class action. There is no cap on the recovery of actual damages (for example, overcharges) under any of these statutes.
This Consumer Protection Law Outline Only Scratches the Surface
Each of the acts described in this basic consumer protection law outline is complicated, including a wide variety of details not explained in this article. Moreover, each of these statutes has its own even more detailed implementing regulations, as well as “official commentary” and other guidance from a regulatory agency. Your situation may fall under one or more of these acts and you may be eligible to receive some or most of the remedies mentioned. To understand your specific rights, you should consult with a consumer fraud lawyer.
At Schlanger Law Group, consumer protection law is our passion. We have extensive experience with the consumer protection statutes explained above. We know how to protect your rights when facing powerful corporations, creditors, credit reporting agencies, and debt collectors that violate the law. If you need consumer law advice, call (212) 500-6114 or fill out this simple online form to schedule a free, no-obligation consultation today.