The Federal Reserve monthly G.19 Consumer Credit Report for January 2009 cited personal debt of $874 billion in revolving credit, which is primarily borrowing done with credit cards. The report cites unemployment as the major cause of the high rate of card use. Consumers using revolving credit are protected by federal laws from fraudulent lending practices and have specific rights when it comes to repaying debt.
Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act, initially passed in 1970 with later amendments and reauthorization, created key legislation to protect consumer rights, including access to free credit reports, a format to challenge the accuracy of reporting and a method for the consumer to provide a narrative to the credit report. Free credit reports are available once per year from the major reporting agencies--TransUnion, Equifax and Experian--but they must be requested by the consumer. Unemployed people applying for jobs may request an additional free report to confirm the credit card information and debt reported about them is accurate.
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act (ECOA) outlaws discrimination based on marital status, religion, age, national origin, sex, race or the applicant's acceptance of public assistance. Information may be requested, excluding religion, but it may not be used to assign a credit rating. Credit card companies must give their reasons when denying cards.
Billing
The Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) regulate the billing and electronic debt payments. These acts offer regulations concerning charge errors, incorrect fund transfers, illegal use of the credit card, math errors, failure to send bills to the correct address and any additional charges made in payment or fund transfers.
Fair Debt Collection Practices Act (FDCPA)
The Fair Debt Collection Practices Act (FDCPA) applies to charge cards as well as automobile and medical care debt accounts. The act requires debt collectors to use fair, honest and non-abusive practices in collecting debts. This stipulates calling hours of between 8 a.m. and 9 p.m., prohibits calling at work if the employer disapproves and outlaws harassment and lying in order to collect a debt. Collectors must identify themselves and must halt contact when the debtor makes a written request to stop collection requests.
Credit Card Accountability, Responsibility and Disclosure Act
The Credit Card Accountability, Responsibility and Disclosure Act, legislation passed in spring 2009, adds specific regulations to processing payments and the calculations of fees. As part of the new law, credit card companies are forbidden from increasing interest rates based on late payments or amounts owed to another lender. The companies are also required to apply payments to accounts with the highest interest, with funds remaining applied to lesser interest accounts owed by the same cardholder. Retroactive rate increases on existing balance are outlawed, with the exception of accounts that are over 60 days in arrears. Additional fees for payment by telephone or on the Internet are also forbidden by the legislation, and changes in the basic credit card interest rate require a 45-day notification.
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