Consumer Credit – Know Your Rights!
October 10, 2018
Almost everyone uses credit in some form or another. The simplest forms of credit are things like utility services or landline telephone services. It may be that the absolute simplest form of credit many people take advantage of is housing rentals. However, housing rentals do not impact a person’s credit score, and utilities usually only have a negative impact if you don’t pay the bills on time.
When it comes to credit and consumer rights, there are two sides to the story. The law mandates certain rights and responsibilities for both you and the credit issuing companies. These laws are meant to protect consumers, but also maintain a balance that motivates consumers to use credit responsibly. To keep you honest, credit laws expect certain things from you.
What is Expected of You?
There are two responsibilities a consumer has when he uses credit services. One is that he must pay his bills on time and in full each billing period. Note, a credit card’s “minimum amount due” is the same as paying the bill in full, even though you have not paid of the entire line of credit. The second requirement is that you maintain clear lines of communication with creditors in the event that the situation changes and you cannot meet your end of any agreements. Many creditors have programs in place to assist consumers with paying what they owe when problems arise.
Creditors Have Rules Too
Sadly, there are situations where the consumer fulfills his end of the bargain, but is working with a nefarious creditor or collection agency. Some play upon the fact that most consumers have no idea what their rights are. Fair credit laws can protect you, but you need to know what rights these laws give you first.
For instance, a creditor cannot advertise a fixed interest rate and then subsequently change it every couple of months. To use that term, the creditor must keep the rate the same for a minimum of one year. Understand that if you are slow in paying your bills or you become delinquent, you give up your right to hold onto that fixed rate.
On the flip side, some people assume they are protected, when that’s not necessarily the case. Do not assume a creditor will swallow fraudulent charges made on your card. They only have to pay $50 per fraudulent transaction. The rest is your problem. Knowing this can motivate you to be smarter with your credit cards and how you secure them.
Collection Agency Woes
If you do get into deep water with a credit account, creditors can contact you to try to clear the situation up or just find out if you can pay the bill. We’ve all heard nightmare stories about collection agencies calling and harassing a person several times a day for days on end. While some agents will take that approach, they are not legally allowed to do so. Debt collectors sometimes use illegal practices, but consumers don’t always know what those are:
- Threats, the use of profanity and obscene language
- Pretending to be government employees or a lawyers just to get you on the phone
- Misrepresenting the amount owed
- Telling you a certain letter or other correspondence is a legal document even when it isn’t
- Threatening legal action if they don’t intend to actually do so
In addition to this, a collection agency must provide you with a written notice that they are collecting on the debt. They cannot simply just start calling you up out of nowhere. They must also provide you with verification that you owe the debt if you ask for it, and they cannot continue calling you without providing it.
How to Enforce Your Rights
Knowing your rights and how to enforce them are both important. If you find a creditor engaged in unfair or illegal credit practices, you can report it to your state’s Attorney General by searching NAAG.org for the appropriate office in your state. You can also sue a collector for the violation, even if you weren’t damaged financially. Of course, that doesn’t erase your debt, but hopefully it will teach the creditor a lesson about following consumer credit protection laws. Visit FTC.gov for more information on your consumer rights.