Financial Education: Safe Credit

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Consumer Protection Laws

Federal bank regulatory agencies ensure that financial institutions follow consumer protection, fair lending and civil rights laws. There are many consumer protection laws that have been passed to protect your rights as consumers. In fact, there re so many, that we cannot possibly cover all of them in this course. However, the following will highlight some of the laws that protect your banking rights:

Truth in Savings Act (TISA)
The Truth in Savings Act enables consumers to make informed decisions about bank accounts before opening a deposit account. Because of this law, banks must provide account disclosures to consumers upon request. Disclosures need to be clear and in writing, so the consumers can keep the information provided. This allows consumers to shop for the best account for them.

Some of the required disclosure information banks must provide include the annual percentage yield (APY), balance requirements and fee information. In addition, the law requires banks to send consumers periodic statements about accounts.

Electronic Fund Transfer Act (EFTA)
The EFTA law establishes rights, liabilities and responsibilities of customers who use electronic fund transfer services and the banks that offer those services. EFTA is designed to protect consumers using electronic fund transfers such as ATM, debit card, telephone or computer transactions.

Expedited Funds Availability Act
The Expedited Funds Availability Act limits the amount of time a bank can hold a check deposited into your checking account. To find out when your money will be available, ask your bank.

FDIC Deposit Insurance Regulations
FDIC insurance protects each depositor's money in the event that the bank fails. The FDIC does not insure nondeposit investment products such as stocks, bonds, mutual funds and annuities.

Truth in Lending Act (TILA)
This law requires lenders to disclose the total cost of your loan and the APR and allows consumers to compare costs. In addition, it gives consumers the right to cancel certain types of home loans within 3 days.

Equal Credit Opportunity Act (ECOA)
This law prohibits lending discrimination based on certain characteristics. It also requires home loan lenders to collect information on the race, sex, marital status and age of applicant. This information is used to monitor for discrimination.

In addition, for home loans, a lender must provide you with a copy of the appraisal (upon written request), which is an estimate of what your home is worth.

Real Estate Settlement Procedures Act (RESPA)
This law requires that lenders provide you with accurate and timely disclosures of the costs of settlement such as loan origination fees (points), broker's commissions and title charges. RESPA was designed to prevent abusive practices such as kickbacks for loan referrals.

Fair Housing Act (FHA)
The Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status or handicap in housing-related transactions.

Consumer Leasing Act (CLA)
The Consumer Leasing Act requires clear disclosure of leasing terms so consumers can compare leases. Disclosures must be made before a lease is signed and must be available for the consumer to keep.