Hannah Locklear | April 05, 2023
Summary: The Consumer Credit Protection Act (CCPA) is a landmark federal law establishing significant consumer protections when it comes to banking transactions, credit card company practices, and issues related to financial services. Since its enactment in 1968, the reach and impact of the CCPA has continued to expand.
The Consumer Credit Reporting Act (CCPA) is arguably one of the most important and impactful laws when it comes to financial transactions, consumer lending, debt collection, and other aspects of financial services. The CCPA, which was signed into law in 1968, instituted a number of regulatory restrictions on banking institutions, credit card issuers, debt collectors and so forth.
In addition, the CCPA introduced an array of regulatory and legal safeguards that consumers in the United States continue to utilize and access to this day.
For example, the CCPA serves as the bedrock legislation for a series of incredibly significant laws that govern and regulate the financial sector, including the Fair Credit Reporting Act, Equal Credit Opportunity Act and Fair Debt Collection Practices Act.
Prior to the CCPA’s enactment, U.S. consumers were forced to work within the confines of requirements and stipulations set forth by banks, credit card companies, and so forth. Consumer rights were downright lacking when it came to lending, debt collection and the practices utilized for credit reporting.
Before 1968, financial institutions routinely took advantage of consumers. For example, financial institutions had zero legal obligation to disclose the terms of loans (including the costs associated with securing the loan), there were no legal limits for interest rates, and they were allowed to garnish a significant percentage of wages if a consumer fell behind on servicing a loan. All of this changed when the CCPA was signed into law.
The Truth in Lending Act (TILA) was a key component of the original CCPA and set forth the goal of ensuring “informed use” by consumers when accessing and utilizing credit. The TILA obligated lenders and credit card issuers to be more transparent by disclosing the terms of credit when someone applied to borrow money from a financial institution. For example, the TILA requires lenders and credit card issuers to disclose the following information in a clear and understandable manner:
The TILA also provided consumers with a 3-day “right of rescission” which afforded the chance to back out of a loan without incurring a financial penalty.
In addition to the TILA, the CCPA established the Federal Wage Garnishment Law. This component of the law was part of the original 1968 legislation, placing limits on lenders and other creditors in their efforts to access and garnish wages from a borrower who fell into default on a loan. As a result of the federal wage garnishment law, consumers are entitled to the following legal protections, even if a consumer is unable to repay the full amount of a loan:
Along with the TILA and federal wage garnishment law, the CCPA also served to establish one of the most important federal laws governing financial transactions—the Fair Credit Reporting Act (FCRA). The FCRA was added to the CCPA in 1970 and has been amended numerous times since its passage.
The FCRA provides U.S. consumers with an array of legal rights and protections when it comes to the information consumer reporting agencies are able to collect about them. For example, the FCRA obligates consumer reporting agencies (including Equifax, TransUnion and Experian) to make sure the information they collect and share about consumers is kept private, examined fairly, and is accurate. In addition, the FCRA provides the following legal rights and protections to U.S. consumers:
If you feel like your rights, protected by the FCRA, have been violated, you can file a complaint with the CFPB here.
Ultimately, the CCPA paved the way for a series of laws protecting consumers. Here are some key takeaways on the CCPA and its importance:
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