Credit Card Laws and Consumer Protection Laws

Reader Question: I keep hearing stuff on the news about credit card companies and all the stuff they get away with. They seem like predators to me. Can they get away with anything, or does the federal government have credit card laws for consumer protection?

It sounds like you're as big a fan of the credit card companies as I am. :-) It does seem like they'll do just about anything to make money off consumers. The key is to use your cards responsibly and manage your debt.

Yes, there are some federal laws that limit what these companies can and cannot do. Some laws are specific to the credit card companies while others are for consumer protection in general. There's a lot of information about this subject online, and at first I didn't want to tackle the question. There's a lot of subject matter! So instead of repeating all of the information here, I'll just make a list of credit card laws, consumer protection acts and the like. I've also provided some links to related resources where you can learn more about these laws.

Let's start with some of the more recent information and work backward from there:

#1 - The Credit Cardholders' Bill of Rights

This federal act (House Resolution 5244) was passed in 2008. The law calls for credit card reform intended to reign in the card companies. I've seen some "toothless" legislation in the past, but I'm actually excited about this new law. Not only is it a comprehensive law (it has ten clear-cut restrictions against the credit card companies), but it's also pretty ambitious in scope. It seeks to abolish most the abuses most commonly cited by angry consumers -- interest rate increases with little or no notice, tricks with payment due dates, excessive fees, etc.

Where to learn more: You can read all about this bill and even download a one-page summary on the government website of Carolyn Maloney (D-NY), who is the chairwoman on the consumer credit subcommittee. Learn more here

#2 - Fair Credit Reporting Act (FCRA)

As the name implies, this federal law focuses on how consumer credit is reported. But it's still relevant to this discussion, so I've included it here. The FCRA was established in 1970 and (at the time of this blog post) it was last updated 2003. Primarily, this law sets guidelines on the three credit-reporting companies (Experian, TransUnion and Equifax). Among other things, the FCRA requires these companies to offer consumers a free copy of their credit reports once per year.

Where to learn more: This credit law is enforced by the Federal Trade Commission (FTC), and you can learn more about it on their website. You can even download the entire act as a PDF file, which could be useful if you ever have trouble sleeping. Learn more here

#3 - Consumer Credit Protection Act (CCPA)

This law was created in 1968. Among other things, it prohibits the credit card companies from practicing any form of discrimination against customers, based on age, sex or income. It also establishes certain rights for cardholders, which makes me think that certain parts of it will soon be surpassed by item #1 on this list (the Cardholder's Bill of Rights).

Where to learn more: You can find information about this credit card law on various websites. The FDIC's website actually has the full text of this law available on one page. Learn more here

#4 - Fair Debt Collection Practices Act (FDCPA)

This is actually part of item #3 above (and act within an act, if you will). It was added to the CCPA in 1978. As the name implies, this law regulates debt-collection practices and prevents abuses from those within this field. Among other things, it requires collectors to verify debt information in order to ensure accuracy. And since is essentially the other side of credit, this federal law deserves a spot on the list.

Where to learn more: This law is under the purview of the Federal Trade Commission, so you can learn more about it by visiting the FTC website: Learn more here

Which Credit Card Laws Did We Miss?

I would like for this blog post to be a "living document," and I intend to update it as needed to serve our readers. So if there's an important credit card law that I've overlooked, please feel free to contact me. The best way to do that is by entering your message in the credit Q&A box at the top of this blog.