The credit card industry is subject to Payment Card Industry (PCI) security standards, which establish rules and standards. Federal regulations define how creditors should handle credit cards, including processing and issuance. However, not all credit card industry laws have the same impact on consumers.
To better understand your rights when dealing with creditors, it's essential to have a good grasp of the laws regulating the industry. This knowledge will help you become more informed about the consumer protections available to you. Here's what you need to know about the laws credit card companies operate under and the consumer protections available.
Essential Credit Card Industry Laws
The world is constantly evolving, as is the way businesses operate. Even credit card companies have experienced massive evolutions over the past 50 years. As a result, lawmakers have passed specific laws to protect consumers and require credit card companies to treat them fairly. These laws apply to the credit card industry, and here are a few key examples.
The Credit Card Act (2009)
The full name is the Credit Card Accountability, Responsibility, and Disclosure Act:
C – Credit Card
A – Accountability
R – Responsibility
D – Disclosure
CARD became law in 2009 and requires credit card companies to clarify terms and conditions that might be misleading to consumers, to cap specific fees, to limit interest rates, and to disclose to consumers the potentially harmful consequences of making only minimum monthly payments for their credit cards.
The Fair Credit Reporting Act (1970)
FCRA allows consumers to access their credit reports and dispute mistakes while limiting the amount of time negative marks remain active on credit reports. Under the Fair Credit Reporting Act, consumers are allowed one free copy of their credit report each year to ensure that its information is accurate and error-free. If information is inaccurate, consumers may dispute that information. This act also limits who can access the information on a person's credit report without the consumer's express permission.
The Electronic Funds Transfer Act (1978)
The act protects consumers by allowing them to challenge errors occurring during the electronic transfer of funds through ATMs, debit cards, direct deposits, point-of-sale transactions, and other electronic transactions and to have them corrected.
The Equal Credit Opportunity Act (1974)
This law prohibits lenders from discriminating against consumers based on gender, religion, race, age, public assistance acceptance, or other non-indicators of overall creditworthiness. Ultimately, lenders must only use relevant factors when extending or denying credit.
To protect consumers, the Federal Trade Commission has a Bureau of Consumer Protection that exists to protect consumers from unfair, deceptive, and fraudulent business practices. If you feel there are violations of your rights or the laws protecting your interests as a consumer, report these actions to the Consumer Financial Protection Bureau.
The following types of consumer protections exist in the case of credit cards.
The Truth in Lending Act, or TILA, requires that lenders make certain types of disclosures related to important information about credit cards and other types of loans, including information about finance charges, annual percentage rates (APRs), payment amounts, and fees. For credit cards, this means that credit card companies must mail periodic statements 21 days before the payment due date and cannot charge late fees for payments made within 21 days of the mailing date for these disclosures.
Discrimination in Credit Granting
The Equal Credit Opportunity Act ensures that creditworthiness is the only criterion used to assess an individual's eligibility for credit. This act prohibits discrimination based on the following information:
- Family status
Credit card companies cannot deny applications based on the above-listed criteria. They may only use information that determines overall creditworthiness to assess credit card applications.
Limits on Interest Rates and Fees
Lawmakers have amended existing bills and added new bills to protect consumers from predatory lending and collection activities. That includes misleading language in credit agreements, excessive fees, and interest rates, and extending credit consumers cannot possibly repay – among other protections.
The Fair Credit Reporting Act requires that consumers be allowed to access the information contained within their credit reports so that they can identify and dispute inaccurate information contained within the report.
The Electronic Funds Transfer Act protects consumers for electronic funds transfers through ACH transactions, debit and credit card transactions, direct deposit transactions, and more.
Enforcement of Credit Card Laws
The Consumer Financial Protection Bureau (CFPB) is ultimately responsible for enforcing laws related to banks, lenders, and other types of financial companies, especially those related to the fair treatment of consumers.
Reporting Abuses and Violations
Suppose you have an issue with a credit card company or feel that a credit card company you're working with is operating in violation of current laws or against the interest of consumers. In that case, reporting the abuses or violations to the Consumer Financial Protection Bureau is a good idea. If they cannot assist you or another agency may better represent your interests, they can let you know. You can even quickly and easily submit a complaint online through the Consumer Financial Protection Bureau website.