1. finance
2. personal finance
3. debt management

How To
Use The Law
To Instantly
Creditor Harassment
Horisons Unlimited Goup
IR#111
How To
Use The Law
To Instantly
STOP
Creditor Harassment
Published by
Horizons Unlimited Group
4924 Hackney
The Colony TX
75056-2219
[email protected]
www.huginc.com
All rights reserved. No part of this report may be reproduced or transmitted in any form or by
any means, electronic or mechanical, including photocopying, recording, or by any information
storage or retrieval system without written permission from the author and publisher, except for
the inclusion of brief quotations in a review.
This report is designed to provide information in regard to the subject matter covered. It is sold
with the understanding that the publisher, authors and advisors are not rendering legal,
accounting, or other professional services. Every effort has been made to make this report as
complete and as accurate as possible. However, there is the possibility that there may be
mistakes both typographical and in content, or that laws governing this subject matter may
change. Therefore, this text should be used only as a general guide and should not be used to
replace the counsel of a professional who is familiar with your particular situation and the laws
of your state.
© Copyright 1997, Insider Reports
CONTENTS
Introduction
Chapter 1
THE FAIR DEBT COLLECTION PRACTICES ACT
With An Extended Layperson's Summary
Chapter 2
HOW TO INSTANTLY STOP HARASSING CALLS AND
LETTERS FROM THIRD-PARTY BILL COLLECTORS
Chapter 3
THE FAIR CREDIT BILLING ACT
With An Extended Layperson's Summary
Chapter 4
EQUAL CREDIT OPPORTUNITY ACT
With A Layperson's Summary
Chapter 5
REGULATION "B" OF THE EQUAL CREDIT
OPPORTUNITY ACT
With An Extended Layperson's Summary
Chapter 6
FAIR CREDIT REPORTING ACT
With A Layperson's Summary
Appendix
A
FEDERAL ENFORCEMENT AGENCIES
Appendix
B
SAMPLE LETTER INVOKING YOUR RIGHTS UNDER
SECTION 805-C OF PL95-109
Appendix
C
GLOSSARY OF LEGAL TERMS FOR THE LAYPERSON
INTRODUCTION
Mark and Susan are heads of a typical American family. Three
children, two cars and a mortgage require thoughtful budgeting of
their two incomes in order to live "comfortably." Last September,
Susan lost her job resulting in an immediate 40% drop in household
income. Shortly afterward their oldest son, Jason, was seriously
injured in an automobile accident. Compounding this tragedy was
the $8,000 in related hospital and doctor bills added to a list of bills
already 60-90 days delinquent.
Unfortunately, the Petersons found no mercy in a system that
measures success only in terms of results and looks only at the
bottom line. The Petersons were on their own to work out of this
terrible situation and the thing they needed more than anything else
was knowledge. They needed to know their options. They needed
to know the laws that have been enacted to protect them from
harassing creditors.
The same information that eventually
empowered the Petersons to take some resemblance of control of
their situation may also help you today or at some point in your
future.
If you haven't had the unfortunate experience of falling seriously
behind on your monthly commitments, if you haven't found yourself
to be occasionally over billed for products or services, if you have
never felt as though you were mistreated by a creditor, then you are
in the minority, so far.
This resource is all about law. The reality is few people begin to
drool with anticipation when they find out that they are going to read
a law book. Let's face it. Plucking eyebrows may rate higher on the
preference list than reading law. But, when you find yourself in a
situation where you need to know—must know—the facts—your
rights—a reference such as this will prove itself to be invaluable in
the returns that it will provide. Reading and learning for yourself
what laws were enacted to protect your rights will bring you peace of
mind; it will give you confidence to take action with surety.
At the same time, one who remains ignorant of his rights is no
better off than he who has no rights.
You will find yourself referring to this reference again and again
as those occasional situations arise where, in the past, you knew
you weren't treated fairly but lacked knowledge of the facts to take
any meaningful action. You'll also see numerous opportunities
where friends and relatives could benefit from your knowledge
gained here, also.
And as further encouragement, you will also find that, other than
the occasional paragraph, most of the law text reads pretty straight
forward. If read in a quiet, relaxed atmosphere without interruption,
you will find comprehension to be surprisingly high. To further assist
you with understanding and planning, you will find explanations of
critical subjects in everyday language throughout the text.
CHAPTER 1:
THE
FAIR DEBT COLLECTION
PRACTICES
ACT
"What is your boss going to think when he finds out you
don't pay your bills?"
Big Bubba's Collection Crew
"If you get a check in the mail postmarked today, then I won't
have to mess up your credit for the next seven years."
Pay Today Agency
"I think I can still stop the summons from being served at
your job tomorrow if you will send me a postdated check right
now."
Precision Pressure Services
Virtually everyone, regardless of name, occupation, or
surprisingly even income is bound to experience encounters of the
"harassing kind" at least once in a lifetime. If it's not part of maturing
as a young adult, it's part of a divorce. If it's not part of a dream gone
bad, it's the result of an illness, natural disaster or a business failure.
Financial hardship comes with many faces, but it stems from two
primary sources. It can be the result of mismanaged credit and not
integrating sound principles into one's financial planing, or it can
result from a personal calamity. The bottom line is that financial
hardship is not a respecter of persons or positions. A couple
earning $80,000 a year can actually be just as vulnerable as a single
parent earning $25,000 a year. Unexpected, and often undeserved,
circumstances can leave both vulnerable to the harassment of
collection agencies.
Before trashing the collection industry, it is important to note that
the debt collection business is very much needed in a free
enterprise system. You could call it a necessary evil if you like.
Without it we would all be paying much higher prices for everything
we buy as businesses tried to recoup their losses from all the
"deadbeats" who didn't pay. The debt collectors are the deterrent to
see that "deadbeats" do pay their bills. And there are a lot of them
out there, as anyone who accepts checks or extends credit can
attest. The gripe with the system is that it has no way to distinguish
a "deadbeat" from an upstanding individual who has just had an
unfortunate turn of events and is eager to rectify his or her situation.
Thus, everyone gets thrown into the same pile; everyone gets
treated as a "deadbeat."
Add to this the fact that most third party bill collectors get paid a
percentage of everything they collect and you have a formula for real
abuse. The lure of big profits in the debt collection industry has
attracted a few unethical agents. There are more than a handful of
bill collectors that will go to any length to collect a debt and secure
their commission. They make their living skillfully applying the
techniques of deception and fear tactics to those who are often most
vulnerable emotionally—and least prepared knowledge wise.
Fortunately, the U.S. Congress has passed laws to limit the
tactics bill collectors can use to extract money from a debtor.
If you are currently experiencing the discomfort of threatening
phone calls and letters, or if you or a loved one ever do in the future,
you can take comfort in the knowledge that you have the authority to
put an immediate end to such harassment. Every citizen has this
authority. The problem is that most don't know it, and as a result
they are having their emotions "played like a string" by unscrupulous
seasoned debt collectors.
Your authority was first delegated to you by the U.S. Senate and
House of Representatives in the Fair Debt Collection Practices Act
of 1977. This law was strengthened in 1986 with the Consumer
Credit Protection Act Amendments. This piece of legislation placed
strict regulations on the methods creditors and their agents can
employ in an effort to collect a debt. (If you are in a business that
extends credit, you should also become familiar with this information
so that you don't unknowingly break the law.)
The Law With A Layperson's
Summary
"THE FAIR DEBT COLLECTION PRACTICES
ACT"
Public law #95-109
The Consumer Credit Protection Act was amended by adding to the
end there of a new Title VIII to prohibit abusive practices by debt
collectors.
TITLE VIII - DEBT COLLECTION PRACTICES
"Sec.
"801.
"802.
"803.
"804.
"805.
"806.
"807.
"808.
"809.
"810.
"811.
"812.
"813.
"814.
"815.
"816.
"817.
"818.
Short title.
Findings and purpose.
Definitions.
Acquisition of location information.
Communication in connection with debt collection.
Harassment or abuse.
False or misleading representations.
Unfair practices.
Validation of debts.
Multiple debts.
Legal actions by debt collectors.
Furnishing certain deceptive forms.
Civil liability.
Administrative enforcement.
Reports to Congress by the Commission.
Relation to State laws.
Exemption for State regulation.
Effective date.
"§ 801. Short Title
"This title may be cited as the 'Fair Debt Collection Practices
Act.'
"§ 802. Findings And Purpose
" (a) There is abundant evidence of the use of abusive,
deceptive, and unfair debt collection practices by many
debt collectors. Abusive debt collection practices
contribute to the number of personal bankruptcies, to
marital instability, to the loss of jobs, and to invasions
of individual privacy.
" (b) Existing laws and procedures for redressing these
injuries are inadequate to protect consumers.
" (c) Means other than misrepresentation or other abusive
debt collection practices are available for the effective
collection of debts.
" (d) Abusive debt collection practices are carried on to a
substantial extent in interstate commerce and through
means and instrumentality's of such commerce. Even
where abusive debt collection practices are purely
intrastate in character, they nevertheless directly affect
interstate commerce.
" (e) It is the purpose of this title to eliminate abusive debt
collection practices by debt collectors, to issuer that
those debt collection practices are not competitively
disadvantaged, and to promote consistent State action
to protect consumers against debt collection abuses.
"§ 803. Definitions
"As used in this title" (1) The term "Commission" means the Federal Trade
Commission.
" (2) The term "communication" means the conveying of
information regarding a debt directly or indirectly to any
person through any medium.
" (3) The term "consumer" means any natural person
obligated or allegedly obligated to pay any debt.
" (4) The term "Creditor" means any person who offers or
extends credit creating a debt or to whom a debt is
owed, but such term does not include any person to the
extent that he receives an assignment or transfer of a
debt in default solely for the purpose of facilitating
collection of such debt for another.
" (5) The term "debt' means any obligation or alleged
obligation of a consumer to pay money arising out of a
transaction in which the money, property, insurance, of
services which are the subject of the transaction are
primarily for personal, family, or household purposes,
whether or not such obligation has been reduced to
judgment.
" (6) The term "debt collector" means any person who uses
any instrumentality of interstate commerce of the mails
in any business the principal purpose of which is the
collection of any debts, or who regularly collects or
attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another.
Notwithstanding the exclusion provided by clause (F)
the t last sentence of this paragraph, the term includes
any creditor who, in the process of collecting his own
debts, uses any name other than his own which would
indicate that a purpose of Section 808(6), such term
also includes any person who uses any instrumentality
of interstate commerce of the mails in any business the
principal purpose of which is the enforcement of
security interests. The term does not include
" (A) any officer or employee of a creditor while, in the
name of the creditor, collecting debts for such
creditor;
" (B) any person while acting as a debt collector for
another person, both of whom are related by
common ownership or affiliated by corporate
control, if the person acting as a debt collector does
so only for persons to who it is so related or
affiliated and if the principal business of such
person is not the collection of debts;
" (C) any officer or employee of the United States or any
State to the extent that collecting o attempting to
collect any debt is in the performance of his official
duties;
" (D) any person while serving or attempting to serve
legal process on any other person in connection
with the judicial enforcement of any debt;
" (E) any nonprofit organization which, at the request of
consumers, performs bona fide consumer credit
counseling and assists consumers in the liquidation
of their debts by receiving payments from such
consumers and distributing such amounts to
creditors; and
" (F) any person collecting or attempting to collect any
debt owed or due or asserted to be owed or due
another to the extent such activity (i) is incidental to
a bona fide fiduciary obligation or a bona fide
escrow arrangement; (ii) concerns a debt which was
originated by such person; (iii) concerns a debt
which was not in default at the time it was obtained
by such person; or (iv) concerns a debt obtained by
such person as a secured party in a commercial
credit transaction involving the creditor.
" (7) The term "location information" means a consumer's
place of abode and his telephone number at such
place, or his place of employment.
" (8) The term "State" means any State, territory, or
possession of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any
political subdivision of any of the foregoing.
"§ 804. Acquisition Of Location Information
"Any debt collector communicating with any person other
than the consumer for the purpose of acquiring location
information about the consumer shall" (1) identify himself, state that he is confirming or correcting
location information concerning the consumer, and,
only if expressly requested, identify his employer;
" (2) not state that such consumer owes any debt;
" (3) not communicate with any such person more than once
unless requested to do so by such person or unless the
debt collector reasonable believes that the earlier
response of such person is erroneous or incomplete
and that such person now has correct or complete
location information:
" (4) not communicate by post card;
" (5) not use any language, or symbol on any envelope or in
the contents of any communication effected by the
mails or telegram that indicates that the debt collector
is in the debt collection business or that the
communication related to the collection of a debt; and
" (6) after the debt collector knows the consumer is
represented by an attorney with regard to the subject
debt and has knowledge of, or can readily ascertain,
such attorney's name and address, not communicate
with any person other that attorney, unless the attorney
fails to respond with a reasonable period of time to
communication from the debt collector.
Layperson's Summary
Section 804 - Acquisition of Location Information
A bill collector may contact your relative, neighbor, or
employer as long as he identifies himself by name (but not
the name of his employer, i.e. Deadbeat Debt Collectors).
He must not mention in any way that you owe money but that
he is "confirming location information" ONLY. He may
never disclose to another person that you owe a debt.
Furthermore, he is allowed to contact a third party such a
neighbor or relative only one time, unless they request that he
call back or the creditor has good reason to believe that they
purposefully withheld information.
"§ 805. Communication In Connection With Debt
Collection
" (a) Communication with the consumer generally Without
the prior consent of the consumer given directly to the
debt collector or the express permission of a court of
competent jurisdiction, a debt collector may not
communicate with a consumer in connection with the
collection of any debt" (1) at any unusual time or place or a time or place
known or which should be known to be
inconvenient to the consumer. In the absence of
knowledge of circumstances to the contrary, a debt
collector shall assume that the convenient time for
communicating with a consumer is after 8 o'clock
ante meridian and before 9 o'clock post meridian
local time at the consumer's location;
" (2) if the debt collector knows the consumer is
represented by an attorney with respect to such
debt and has knowledge of, or can readily
ascertain, such attorney's name and address,
unless the attorney fails to respond within a
reasonable period of time to a communication from
the debt collector or unless the attorney consents to
direct communication with the consumer; or
" (3) at the consumer's place of employment if the debt
collector knows or has reason to know that the
consumer's employer prohibits the consumer from
receiving such communication.
" (b) Communication with third parties. - Except as provided
in section 804, without the prior consent of the
consumer given directly to the debt collector, or the
express permission of a court of competent jurisdiction,
or as reasonable necessary to effectuate a post
judgment judicial remedy, a debt collector may not
communicate, in connection with the collection of any
debt, with any person other than the consumer, his
attorney, a consumer reporting agency if otherwise
permitted by law, the creditor, the attorney of the
creditor, or the attorney of the debt collector.
" (c) Ceasing communication - If a consumer notifies a debt
collector in writing that the consumer refuses to pay a
debt or that the consumer wishes the debt collector to
cease further communication with the consumer, the
debt collector shall not communicate further with the
consumer with respect to such debt, except" (1) to advise the consumer that the debt collector's
further efforts are being terminated;
" (2) to notify the consumer that the debt collector or
creditor may invoke specified remedies which are
ordinarily invoked by such debt collector or creditor;
or
" (3) where applicable, to notify the consumer that the
debt collector or creditor intends to invoke a
specified remedy.
" If such notice from the consumer is made by mail,
notification shall be complete upon receipt.
" (d) For the purpose of this section, the term "consumer"
includes the consumer's spouse, parent (if the
consumer is a minor), guardian, executor, or
administrator.
Layperson's Summary
Section 805 - Communication in Connection With Debt
Collection
A creditor may only call you between the hours of 8:00 AM
and 9:00 PM. Additionally, a creditor may not contact you
at work if he has "reason to believe" that your boss does not
want you to take personal calls at work. "Reason to believe"
can be established as easily as your telling the bill collector
that your supervisor doesn't like you to get personal calls and
you would greatly appreciate it if he would not call you at
work anymore. See Chapter Two for a complete explanation
of Section 805C.
"§ 806. Harassment Or Abuse
"A debt collector may not engage in any conduct the natural
consequence of which is to harass, oppress, or abuse any
person in connection with the collection of a debt. Without
limiting the general application of the foregoing, the following
conduct is a violation of this section:
" (1) The use or threat of use of violence or other criminal
means to harm the physical person, reputation, or
property of any person.
" (2) The use of obscene or profane language or language
the natural consequence of which is to abuse the
hearer or reader.
" (3) The publication of a list of consumers who allegedly
refuse to pay debts, except to a consumer reporting
agency or the persons meeting the requirements of
section 603(f) or 604(3) of this Act.
" (4) The advertisement for sale of any debt to coerce
payment of the debt.
" (5) Causing a telephone to ring or engaging any person in
telephone conversation repeatedly or continuously with
intent to annoy, abuse, or harass any person at the
called number.
" (6) Except as provided in section 804, the placement of
telephone calls without meaningful disclosure of the
caller's identity.
Layperson's Summary
Section 806 - Harassment or Abuse
A creditor may never use obscene or otherwise abusive
language towards you. [A phone recorder is helpful if you
ever hope to legally establish this charge. The law allows
for a phone conversation to be recorded in most states as
long as at least one of the parties knows that the conversation
is being recorded.] Additionally, a creditor may never
attempt to embarrass you in any way, such as publishing
your name in a list of consumers who refuse to pay debts or
advertising to sell your debt to someone else.
"§ 807. False Or Misleading Representations
"A debt collector may not use any false, deceptive, or
misleading representation or means in connection with the
collection of any debt. Without limiting the general application
of the foregoing, the following conduct is a violation of this
section:
" (1) The false representation or implication that the debt
collector is vouched for, bonded by, or affiliated with the
United States or any State, including the use of any
badge, uniform or facsimile thereof.
" (2) The false representation of " (A) the character, amount, or legal status of any debt;
or
" (B) any services rendered or compensation which may
be lawfully received by any debt collector for the
collection of a debt.
" (3) The false representation or implication that any
individual is an attorney or that any communication is
from an attorney.
" (4) The representation or implication that nonpayment of
any debt will result in the arrest or imprisonment of any
person or the seizure, garnishment, attachment, or sale
of any property or wages of any person unless such
action is lawful and the debt collector or creditor
intends to take such action.
" (5) The threat to take any action that cannot legally be
taken or that is not intended to be taken.
" (6) The false representation or implication that a sale,
referral, or other transfer of any interest in a debt shall
cause the consumer to" (A) lose any claim or defense to payment of the debt;
or
" (B) become subject to any practice prohibited by this
title.
" (7) The false representation of implication that the
consumer committed any crime or other conduct in
order to disgrace the consumer.
" (8) Communicating or threatening to communicate to any
person credit information which is known or which
should be known to be false, including the failure to
communicate that a disputed debt is disputed.
" (9) The use or distribution of any written communication
which simulates or is falsely represented to be a
document authorized, issued, or approved by any court,
official, or agency of the United States or any State, or
which creates a false impression as to its source,
authorization, or approval.
" (10) The use of any false representation or deceptive
means to collect or attempt to collect any debt or to
obtain information concerning a consumer.
" (11) Except as otherwise provided for communications to
acquire location information under section 804, the
failure to disclose clearly in all communications made
to collect a debt or to obtain information about a
consumer, that the debt collector is attempting to
collect a debt and that any information obtained will be
used for that purpose.
" (12) The false representation or implication that accounts
have been turned over to innocent purchasers for
value.
" (13) The false representation or implication that documents
are legal process.
" (14) The use of any business, company, or organization
name other than the true name of the debt collector's
business, company, or organization.
" (15) The false representation or implication that documents
are not legal process forms or do not require action by
the consumer.
" (16) The false representation or implication that a debt
collector operates or is employed by a consumer
reporting agency as defined by section 603(f) of this
Act.
Layperson's Summary
Section 807 - False Or Misleading Representation
A creditor may not use deceptive or misleading means in an
effort to collect a debt. That could include the following:
1) Falsely implying that he is an attorney or government
representative.
2) Falsely implying that you have committed a crime.
3) Representing correspondence as being from an attorney
when it is not.
4) Implying that nonpayment of any debt will result in loss of
personal property, wages, or arrest unless (a) it is lawful and
(b) the creditor intends to follow through with such action.
5) Threatening to take action that is not legal or that the
creditor does not intend to take.
6) Implying that the transfer of interest in the debt to
someone else will result in any of the actions in number four.
7) The false representation that you committed a crime in an
effort to disgrace you.
8) Misrepresenting your credit or failing to communicate that
you are disputing a debt.
9) The use of written communication which simulates or is
falsely represented to be a document authorized, issued or
approved by any court, official or agency of the U.S. or any
state, or which creates a false impression as to its source,
authorization, or approval.
10) The use of any false or deceptive means to attempt to
collect a debt or obtain information about a consumer.
11) Failure to disclose clearly in all communication that the
debtor is attempting to collect a debt and that any
information obtained will be used for that purpose.
12) The false representation or implication that accounts
have been turned over to innocent purchasers.
13) The false representation or implication that documents
are part of the legal process.
14) The use of any business, company, or organization name
other than the actual name of the debt collector's business.
15) The false representation that papers being sent to you
are not legal process forms when they are.
16) The false representation that a debt collector is employed
by a consumer reporting agency.
"§ 808. Unfair Practices
"A debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt. Without
limiting the general application of the foregoing, the following
conduct is a violation of this section:
" (1) The collection of any amount (including any interest,
fee, charges, or expense incidental to the principal
obligation) unless such amount is expressly authorized
by the agreement creating the debt or permitted by law.
" (2) The acceptance by a debt collector from any person of
a check or other payment instrument postdated by
more than five days unless such person is notified in
writing of the debt collector's intent to deposit such
check or instrument not more than ten nor less than
three business days prior to such deposit.
" (3) The solicitation by a debt collector of any postdated
check or other postdated payment instrument for the
purpose of threatening or instituting criminal
prosecution.
" (4) Depositing or threatening to deposit any postdated
check or other postdated payment instrument prior to
the date on such check or instrument.
" (5) Causing charges to be make to any person for
communications by concealment of the true purpose of
the communication. Such charges include, but are not
limited to, collect telephone calls and telegram fees.
" (6) Taking or threatening to take any nonjudicial action to
effect dispossession or disablement of property if" (A) there is no present right to possession of the
property claimed as collateral through an
enforceable security interest;
" (B) there is no present intention to take possession of
the property; or
" (C) the property is exempt by law from such
dispossession or disablement.
" (7) Communicating with a consumer regarding a debt by
postcard.
" (8) Using any language or symbol, other than the debt
collector's address, on any envelope when
communicating with a consumer by use of the mails or
by telegram, except that a debt collector may use his
business name if such name does not indicate that he
is in the debt collection business.
Layperson's Summary
Section 808 - Unfair Practices
1) A creditor may not collect any interest, fee, or charge
unless (a) it is legal and (b) it was expressly authorized in the
original agreement creating the debt.
2) If a creditor accepts a check that is more that 5 days
postdated, he must notify the consumer in writing a minimum
of 3 days and a maximum of 10 days before depositing the
check.
3) A creditor may not solicit a postdated check for the
purpose of threatening or instituting criminal prosecution.
4) A creditor may not deposit or threaten to deposit a
postdated check before its intended date.
5) A creditor can not cause charges to be incurred by you for
the sake of communication such as a collect phone call or
telegram fees.
6) A creditor may not threaten nonjudicial action to take
property if (a) there is no right to the property or (b) he does
not intend to take such action or (c) the property is exempt
from such action.
7) A creditor may not use any means of mail that might be
embarrassing to you such as a post card or an envelope with
a symbol or wording that indicates that it is a debt collection
letter. He may use his business name on the envelope if it
doesn't indicate that it is a debt
collection business.
8) A creditor may never give false credit information about
you to anyone.
"§ 809. Validation Of Debts
" (a) Within five days after the initial communication with a
consumer in connection with the collection of any debt,
a debt collector shall, unless the following information
is contained in the initial communication or the
consumer has paid the debt, send the consumer a
written notice containing" (1) the amount of the debt;
" (2) the name of the creditor to whom the debt is owed;
" (3) a statement that unless the consumer, within thirty
days after receipt of notice, disputes the validity of
the debt, or any portion thereof, the debt will be
assumed to be valid by the debt collector;
" (4) a statement that if the consumer notifies the debt
collector in writing within the thirty-day period that
the debt, or any portion thereof, is disputed, the
debt collector will obtain verification of the debt or a
copy of a judgment against the consumer and a
copy of such verification or judgment will be mailed
to the consumer by the debt collector; and
" (5) a statement that, upon the consumer's written
request within the thirty-day period, the debt
collector will provide the consumer with the name
and address of the original creditor, if different from
the current creditor.
" (b) If the consumer notifies the debt collector in writing
within the thirty-day period described in subsection (a)
that the debt, or any portion thereof, is disputed, or that
the consumer requests the name and address of the
original creditor, the debt collector shall cease
collection of the debt, or any disputed portion thereof,
until the debt collector obtains verification of the debt or
a copy of a judgment, or the name and address of the
original creditor, and a copy of such verification or
judgment, or name and address of the original creditor,
is mailed to the consumer by the debt collector.
" (c) The failure of a consumer to dispute the validity of a
debt under this section may not be construed by any
court as an admission of liability by the consumer.
Layperson's Summary
Section 809 - Validation of Debts
A debt collector must notify you in writing within 5 days of
the initial communication of the following:
1) The amount of debt
2) To whom the debt is owed
3) A 30 day right to dispute [Failure to dispute the debt
within 30 days will not be construed by any courts to be an
admission of liability.]
"§ 810. Multiple Debts
"If any consumer owes multiple debts and makes any single
payment to any debt collector with respect to such debts, such
debt collector may not apply such payment to any debt which
is disputed by the consumer and, where applicable, shall apply
such payment in accordance with the consumer's directions.
Layperson's Summary
Section 810 - Multiple Debts
If a you owe more that one debt to the same creditor, all
payments must be credited to the account(s) as instructed by
you. A creditor can not apply a payment to one debt if it was
clearly intended for another; and he may not apply payment
to an account that is currently being disputed.
"§ 811. Legal Actions By Debt Collectors
" (a) Any debt collector who brings any legal action on a debt
against any consumer shall-
" (1) in the case of an action to enforce an interest in
real property securing the consumer's obligation,
bring such action only in a judicial district or similar
legal entity in which such real property is located; or
" (2) in the case of an action not described in paragraph
(1), bring such action only in the judicial district or
similar legal entity" (A) in which such consumer signed the contract
sued upon; or
" (B) in which such consumer resides at the
commencement of the action.
" (b) Nothing in this title shall be construed to authorize the
bringing of legal actions by debt collectors.
Layperson's Summary
Section 811 - Legal Actions By Debt Collectors
If a debt collector decides to take legal action such a suit
against you, they must do so 1) where the mortgaged
property is located, or 2) where you live, or 3) where you
signed the contract. In other words, a collection agency in
New York can't file an action in a New York court if you live
in or signed the contract in Nevada. They must come to the
property or to you.
"§ 812. Furnishing Certain Deceptive Forms.
" (a) It is unlawful to design, compile, and furnish any form
knowing that such form would be used to create the
false belief in a consumer that a person other than the
creditor of such consumer is participating in the
collection of or in an attempt to collect a debt such
consumer allegedly owes such creditor, when in fact
such person is not so participating.
" (b) Any person who violates this section shall be liable to
the same extent and the same manner as a debt
collector is liable under Section 813 for failure to
comply with a provision of this title.
"§ 813. Civil Liability
" (a) Except as otherwise provided by this section, any debt
collector who fails to comply with any provision of this
title with respect to any person is liable to such person
in an amount equal to the sum of" (1) any actual damage sustained by such as a result of
such failure;
" (2) (A) in the case of any action by an individual, such
additional damages as the court may allow, but not
exceeding $1,000; or
" (B) in the case of a class action, (i) such amount for
each named plaintiff as could be received under
subparagraph (A), and (ii) such amount as the
court may allow for all other class members,
without regard to a minimum individual recovery,
not to exceed the lesser of $500,000 or I percent
of the net worth of the debt collector; and
" (3) in the case of any successful action to enforce the
foregoing liability, the costs of the action, together
with a reasonable attorney's fee as determined by
the court. On a finding by the court that an action
under this section was brought in bad faith and for
the purpose of harassment, the court may award to
the defendant attorney's fees reasonable in relation
to the work expended and costs.
" (b) In determining the amount of liability in any action
under subsection (a), the court shall consider, among
other relevant factors" (1) in any individual action under subsection (a) (2) (A),
the frequency and persistence of noncompliance by
the debt collector, the nature of such
noncompliance, and the extent to which such
noncompliance was intentional; or
" (2) in any class action under subsection (a) (2) (B), the
frequency and persistence of noncompliance by the
debt collector, the nature of such noncompliance,
the resources of the debt collector, the number of
persons adversely affected, and the extent to which
the debt collector's noncompliance was intentional.
" (c) A debt collector may not be held liable in any action
brought under this title if the debt collector shows by a
preponderance of evidence that the violation was not
intentional and resulted from a bonafide error
notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.
" (d) An action to enforce any liability created by this title
may be brought in any appropriate United States
district court without regard to the amount in
controversy, or in another court of competent
jurisdiction, within one year from the date on which the
violation occurs.
" (e) No provision of this section imposing any liability shall
apply to any act done or omitted in good faith in
conformity with any advisory opinion of the
Commission, not withstanding that after such act or
omission has occurred, such opinion is amended,
rescinded, or determined by judicial or other authority
to be invalid for any reason.
"§ 814. Administrative Enforcement
" (a) Compliance with this title shall be enforced by the
Commission, except to the extent that enforcement of
the requirements imposed under this title is specifically
committed to another agency under subsection (b) For
purpose of the exercise by the Commission of its
functions and powers under the Federal Trade
Commission Act, a violation of this title shall be
deemed an unfair or deceptive act or practice in
violation of that Act. All of the functions and powers of
the Commission under the Federal Trade Commission
Act are available to the Commission to enforce
compliance by any person with this title, irrespective of
whether that person is engaged in commerce or meets
any other jurisdictional tests in the Federal Trade
Commission Act, including the power to enforce the
provisions of this title in the same manner as if the
violation had been violation of a Federal Trade
Commission trade regulation rule.
" (b) Compliance with any requirement imposed under this
title shall be enforced under" (1) section 8 of the Federal Deposit Insurance Act, in
the case of" (A) national banks, by the Comptroller of the
Currency;
" (B) member banks of the Federal Reserve System
(other than national banks), by the Federal
Reserve Board; and
" (C) banks the deposits or accounts of which are
insured by the Federal Deposit Insurance
Corporation (other than members of the Federal
Reserve System), by the Board of Directors of
the Federal Deposit Insurance Corporation;
" (2) section 5(d) of the Home Owners Loan Act of 1933,
section 407 of the National Housing Act, and
sections 6(i) and 17 of the Federal Home Loan
Bank Act, by the Federal Home Loan Bank Board
(acting directly or through the Federal Savings and
Loan Insurance Corporation) in the case of any
institution subject to any of those provisions;
" (3) the Federal Credit Union Act, by the National Credit
Union Administration Board with respect to any
Federal credit union;
" (4) subtitle IV of Title 49, by the Interstate Commerce
Commission with respect to any common carrier
subject to such subtitle;
" (5) the Federal Aviation Act of 1958, by the Secretary
of Transportation with respect to any air carrier of
any foreign air carrier subject to that Act; and
" (6) the Packers and Stockyards Act, 1921 (except as
provided in section 406 of that Act, by the Secretary
of Agriculture with respect to any activities subject
to that Act.
" (c) For the purpose of the exercise by any agency referred
to in subsection (b) of its powers under an Act referred
to in that subsection, a violation of any requirement
imposed under that Act. In addition to its powers under
any provision of law specifically referred to in
subsection (b), each of the agencies referred to in that
subsection may exercise, for the purpose of enforcing
compliance with any requirement imposed under this
title any other agency referred to in subsection (b) may
promulgate trade regulation rules or other regulations
with respect to the collection of debt collectors as
defined in this title.
"§ 815. Reports To Congress By The Commission
" (a) Not later than one year after the effective date of this
title and at one-year intervals thereafter, the
Commission shall make reports to the Congress
concerning the administration of its functions under this
title, including such recommendations as the
Commission deems necessary or appropriate,. In
addition, each report of the Commission shall include
its assessment of the extent to which compliance with
this title is being achieved and a summary of the
enforcement actions taken by the Commission under
section 814 of this title.
" (b) In the exercise of its functions under this title, the
Commission may obtain upon request the views of any
other Federal agency which exercises enforcement
functions under section 814 of this title.
"§ 816. Relation To State Laws
"This title does not annul, alter, or affect, or exempt any
person subject to the provisions of this title from complying
with the laws of any State with respect to debt collection
practices, except to the extent that those laws are inconsistent
with any provision of this title, and then only to the extent of
the inconsistency. For purposes of this section, a State law is
not inconsistent with this title if the protection provided by this
title.
"§ 817. Exemption For State Regulation
"The Commission shall be regulation exempt from the
requirements of this title any class of debt collection practices
within any State if the Commission determines that under the
law of that State that class of debt collection practices is
subject to requirements substantially similar to those imposed
by this title, and that there is adequate provision for
enforcement.
"§ 818. Effective Date
"This title takes effect upon the expiration of six months after
the date of this enactment, but section 809 shall apply only
with respect to debts for which the initial attempt to collect
occurs after such effective date."
Approved September 20, 1977
LEGISLATIVE HISTORY:
Public Las 95-109 [H.R. 5294]
HOUSE REPORT: No 95-131 (Comm. on Banking, Finance, an
Urban Affairs)
SENATE REPORT: No 95-382 (Comm. on Banking, Housing,
and Urban Affairs)
CONGRESSIONAL RECORD, Vol. 123 (1977):
Apr. 4, considered and passed House.
Aug. 5, considered and passed Senate, amended.
Sept. 8, House agreed to Senate amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS,
Vol. 13, No. 39:
Sept. 20, Presidential statement.
AMENDMENTS:
SECTION 621, SUBSECTIONS (b) (3), (b) (4) and (b) (5) were
amended to transfer certain administrative enforcement
responsibilities pursuant to Pub. L. 95-473, / 3(b), Oct. 17, 1978.92
Stat.166;Pub.L.95-630,TitleV. 501,November 10, 1978, 92 Stat.
3680; Pub. L. 98-443, 9(h), Oct. 4, 1984, 98 Stat, (708.)
SECTION 803, SUBSECTION (6), defining "debt collector," was
amended to repeal the attorney at law exemption at former Section
(6) (F) and to redesignate Section 803 (6) (G) pursuant to Pub. L.
99-361, July 9, 1986, 100 Stat. 768. For legislative history, see H.R.
237, HOUSE REPORT No. 99-405 (Comm. on Banking, Finance an
Urban Affairs). CONGRESSIONAL RECORD: Vol. 131
(1985): Dec. 2, considered and passed House. Vol. 132
(1986): June 26, considered and passed Senate.
Know When And How To Draw
The Line
More than a few companies have a long history of abusing
and even going beyond the limits of state and federal regulations
when attempting to collect a debt. Most companies that employ
such techniques can easily be put in check by explaining that you
are unhappy with the unprofessional manner in which your account
is being handled and you are considering filing a complaint with the
Better Business Bureau, the Federal Trade Commission and/or the
local Department of Consumer Affairs.
If You've Been Treated Unfairly
First, it should be made clear that this advice is not intended
to represent or replace that of an competent attorney familiar with
the laws of your individual state. If you have been the victim of an
abusive bill collector you should consult with your attorney to
determine if you have sufficient grounds for filing a law suit. Yes,
Public Law 95-109 does provide guidelines for a civil liability suit up
to $1,000 within one year of the actual incident. And as far as state
laws go, they can add to the restrictions placed on creditors
attempting to collect a debt, but they can not annul or reduce any of
the requirements outlined in PL 95-109. You can find out about any
additional state laws by contacting your state Attorney General's
office.
If you have been harassed but do not desire to pursue legal
action, you should at least report the incident to the proper
regulatory agency. In the vast majority of cases that would be the
Federal Trade Commission or your Attorney General. Although the
FTC will not normally intervene in an individual dispute, several
complaints on a particular company can spark an investigation and
put an end to unethical practices. The National FTC Headquarters
can be contacted at:
FTC
2121 "L" street, NW
Washington, DC 20530
(202) 326-2222
Some other agencies which have jurisdiction over specific types
of financial institutions may also be helpful in your situation. For
example, complaints against banks should be registered with the
Federal Deposit Insurance Corporation (FDIC) or the Comptroller of
the Currency while Credit Unions are regulated by the National
Credit Union Administration Board.
If you feel you are being treated unfairly by a bank, you may
contact the office of Bank Consumer Affairs which receives,
investigates and disposes of consumer complaints against
state-chartered banks. They are supervised by the Federal Deposit
Insurance Corporation (FDIC). Call or write:
FDIC
Office of Bank Consumer Affairs
550 Seventeenth St. N.W.
Washington, DC 20429
(202) 393-8400
(800) 424-5488
You may also contact the State Consumer Protection Agency.
Too many consumer complaints to any of these
agencies/organizations can spark an investigation into that particular
company. Some techniques that would be grounds for a complaint
would be:
* Slandering your name to friends, neighbors, employer, etc.
Creditors are allowed to contact such people as long as they first
inform them of the nature of their calling, but to participate in name
calling may be grounds for defamation of character.
* Relentless and unreasonable phone campaign. Check with
your attorney to see if you have grounds for harassment.
The bottom line is "Know your rights." Few collection agencies
bend the limits of the law out of their ignorance. Those that break
the law do so because they have confidence in the ignorance of the
average consumer. If you should have the unpleasant experience of
being contacted by an unscrupulous bill collector in the future, put
him in his place in the very beginning by explaining that you are very
familiar with Public Law 95-109 and that you expect to be treated in
a professional and courteous manner. You need not surrender your
dignity.
CHAPTER 2:
HOW TO INSTANTLY STOP
HARASSING CALLS AND
LETTERS FROM
THIRD-PARTY BILL
COLLECTORS
They say you owe money that you don't think you should owe. Or
maybe, you owe the money but due to financial circumstances you
just can't pay it right now. In the meantime, you've got third-party
collection agencies harassing you and your family by phone and by
mail. It's gotten to the point that you're losing sleep worrying about
it. What do you do?
Well, one option is to make them go away. Yes, you can instantly
stop unwanted phone calls and letters by invoking Public Law
95-109 (The Fair Credit Collection Practices Act) Section 805-C. It
provides that once notified in writing to cease further
communication, a third party bill collector may only contact you one
last time in order to inform you of what action they intend to take on
behalf of their client. Normally, this will be a phone call telling you
that they are going to recommend that their client file a lawsuit to
recover the debt and additional fees. That may sound real scary,
but the truth is that the majority of the time the collection agency will
then return your file to the original creditor who often reports the debt
as a charge-off on your credit file...The End.
If you invoke the law very early (as soon as you get the first letter
from a third-party collection agency) you may prevent an inquiry from
a collection agency even showing up on your credit file or a note
indicating that the account was turned over to outside collections. In
other words, they may send it right back to the original creditor
without spending the money to pull your credit file. This is good
damage control for your credit history since either notation on your
report would be considered very negative by a potential future
lender.
Even with the slim chance the creditor does file a law suit, it's not
the end of the issue by any means. There is always room to
negotiate. The reality for creditors is that judgments are costly and
difficult to enforce in most states, thus unsecured loans such as
credit cards, medical service, etc. are often written off as
uncollectible. This may be one viable option for you to explore in
order to get creditors "off your back" until you can settle the debt. A
consultation with a knowledgeable attorney will brief you on the
likelihood of a creditor's legal action based on your particular state's
laws.
Invoking the Law
1.) Make a copy of the most recent correspondence from the
collection agency.
2.) Write or type a letter expressing your desire for 1) the bill
collector to cease communication with you 2) your willingness to
deal only with the original creditor and 3) that you are giving proper
notification in accordance with PL 95-109. Include the account
number assigned to you by the collection agency. (See Appendix B
for a sample cease & desist letter.)
3.) Make a copy of your letter.
4.) Mail your letter and the copy of the letter they sent you in an
envelope via Certified Mail - Return Receipt Requested. You
must send it certified mail to prove it was received by them. This
also reinforces to the collection agency that you are savy about the
law.
5.) Within a couple of weeks (maximum) you should receive a
green card as your receipt for delivery. File it with your copies of the
other letters in case you ever need to take legal action.
Of course there are other options to get bill collectors off of
your back. You may consider retaining an attorney. Once your
debtor is notified that you have an attorney, they may not contact
you or your family further unless your attorney doesn't respond to
them in a reasonable period of time. It is important to note that this
method is effective for the original creditor also and not just
third-party agents as covered above.
The best and most honorable option in most cases would be to
negotiate a settlement. Of course you don't have the money to pay
them in full or you would have already done it. Try offering 10 or 20
percent of the total balance as payment in full. Most creditors would
rather have something guaranteed than holding out for the entire
balance and risk getting nothing. Make sure you have everything in
writing including how it will be reported on your credit. Don't agree
to their reporting it as a paid collection account. Instead, you insist
that it say "Account closed- paid in full." Don't allow them to con you
into thinking that they can't do that. They may tell you that they can't
alter accurate credit history; and legally this is true. But you are not
demanding them to change your payment history; you are
demanding that they report the actual status of the account,
"Account closed- paid in full." The attractiveness of this method is
to keep your credit file as clean as possible.
Again the answer is in knowing the law and the facts. When
evaluating your options, consider the legitimacy of the debt, the size,
age and type of debt, as well as your prognosis of your ability to
repay the debt at some point in the future.
Also notice that bankruptcy was not listed as an option here.
Yes, it is one—probably the most common option today. Many
lawyers are making BIG money selling the idea of bankruptcy as the
solution to everyone's financial problems. Just open a local TV
guide or shoppers news and you'll see dozens of ads, "Stop Creditor
Harassment!" The reality is that the majority of bankruptcies are
avoidable and bankruptcy is not as painless as it first appears.
Bankruptcy should be a last resort in extreme cases where vital
assets are in jeopardy. A wise negotiator can do far more good
than a greedy attorney. NEGOTIATE!!! Or find an attorney who is
willing to negotiate!
NOTE: If you are in a critical financial situation, please
read HUG Insider Report #107, Cash Now: The
Uncommon Sense Guide To Raising Cash Fast & Rapid
Debt Reduction. You will discover that 90 percent of the
personal bankruptcies being filed today are not necessary
and as little as an extra $250 month would make all the
difference.
CHAPTER 3:
THE
FAIR CREDIT BILLING
ACT
"THE FAIR CREDIT BILLING ACT"
Public Law 93-495
Title III of the Consumer Credit Protection Act
TITLE III - FAIR CREDIT BILLING
"Sec.
"301.
"302.
"303.
"304.
"305.
"306.
Short title.
Declaration of purpose.
Definitions of creditor and open end credit plan.
Disclosure of fair credit billing rights.
Disclosure of billing contact.
Billing practices.
"§ 301. Short Title
This title may be cited as the "Fair Credit Billing Act".
"§ 302. Declaration Of Purpose
The last sentence of section 102 of the Truth in Lending Act
(I 5 U. S.C. 160 1) is amended by striking out the period and
inserting in lieu thereof a comma and the following: "and to
protect the consumer against inaccurate and unfair credit
billing and credit card practices."
"§ 303. Definitions Of Creditor And Open End Credit
Plan
The first sentence of section 103 (f) of the Truth in Lending
Act (15 U.S.C. 1602(f) in amended to read as follows: "The
term 'creditor' refers only to creditors who regularly extend, or
arrange for the extension of, credit which is payable by
agreement in more than four installments or for which the
payment of a finance charge is or may be required, whether in
connection with loans, sales of property or services, or
otherwise. For the purposes of the requirements imposed
under Chapter 4 and sections 127 (a) (6), 127 (a) (7), 127 (a)
(8), 127 (b) (1), 127 (b) (2), 127 (b) (3)? 127 (b) (9), and 127
(b) (I 1) of Chapter 2 of this Title, the term 'creditor' shall also
include card issuers whether or not the amount due is payable
by agreement in more than four installments or the payment of
a finance charge is or may be required, and the Board shall,
by regulation, apply these requirements to such card issuers,
to the extent appropriate, even though the requirements are by
their terms applicable only to creditors offering open end credit
plans.
"§ 304. Disclosure Of Fair Credit Billing Rights
" (a) Section 127 (a) of the Truth in Lending Act (I 5 U. S.C.
1637(a) is amended by adding to the end thereof a new
paragraph as follows:
" (8) A statement, in a form prescribed by regulations of
the Board of the protection provided by sections
161 and 170 to an obligor and the creditor's
responsibilities under sections 162 and 170. With
respect to each of two billing cycles per year, at
semiannual intervals, the creditor shall transmit
such statement to each obligor to whom the creditor
is required to transmit a statement pursuant to
section 127 (b) for such billing cycle."
" (b) Section 127 (c) of such Act (15 U.S.C. 1637 (c) is
amended to read:
" (c) In the case of any existing account under an open
end consumer credit plan having an outstanding
balance of more than $1 at or after the close of the
creditor's first full billing cycle under the plan after
the effective date of subsection (a), to the extent
applicable and not previously disclosed, shall be
disclosed in a notice mailed or delivered to the
obligor not later than the time of mailing the next
statement required by subsection(b)."
"§ 305. Disclosure Of Billing Contact
Section 127 (b) of the Truth in Lending Act (15 U.S.C. 1637
(b) is amended by adding at the end thereof a new paragraph
as follows:
" (11) The address to be used by the creditor for the purpose
of receiving billing inquiries from the obligor."
Layperson's Summary
This next section, Section 306, is the primary reason this law
was included in this reference. If you ever have a question
about billing, or how your payment is suppose to be handled,
you will find it here.
"§ 306. Billing Practices
The Truth in Lending Act (15 U.S.C. 1601-1665) is amended
by adding at the end thereof a new chapter as follows:
CHAPTER 4 - CREDIT BILLING
" Sec.
" 161. Correction of billing errors.
" 162. Regulation of credit reports.
" 163. Length of billing period.
" 164. Prompt crediting of payments.
" 165. Crediting excess payments.
" 166. Prompt notification of returns.
" 167. Use of cash discounts.
" 168. Prohibition of tie-in services.
" 169. Prohibition of offsets.
" 170. Rights of credit card customers.
" 171. Relation to State laws.
"§ 161. Correction Of Billing Errors
" (a) If a creditor, within sixty days after having transmitted to
an obligor a statement of the obligor's account in
connection with an extension of consumer credit,
receives at the address disclosed under section 127 (b)
(I 1) a written notice (other than notice on a payment
stub or other payment medium supplied by the creditor
if the creditor so stipulates with the disclosure required
under section 127
" (a)(8) from the obligor in which the obligor" (1) sets forth or otherwise enables the creditor to
identify the name and account number (if any) of
the obligor,
" (2) indicates the obligor's belief that the statement
contains a billing error and the amount of such
billing error, and extent applicable) that the
statement contains a billing error, the creditor
shall, unless the obligor has, after giving such
written notice and before the expiration of the
time limits herein specified, agreed that the
statement was correct" (3) sets forth the reasons for the obligor's belief (to
the extent applicable) that the statement
contains a billing error, the creditor shall, unless
the obligor has, after giving such written notice
and before the expiration of the time limits herein
specified. agreed that the statement was correct" (A) not later than thirty days after the receipt of
the notice, send a written acknowledgment
thereof to the obligor, unless the action
required in subparagraph (B) is taken within
such thirty-day period, and
" (B) not later than two complete billing cycles of
the creditor (in no event later than ninety days)
after the receipt of the notice and prior to
taking any action to collect the amount, or any
part thereof, indicated by the obligor under
paragraph (2) either" (i) make appropriate corrections in the account
of the obligor, including the crediting of any
finance charges on amounts erroneously
billed, and transmit to the obligor a
notification of such corrections and the
creditor's explanation of any change in the
amount indicated by the obligor under
paragraph (2) and, if any such change is
made and the obligor so requests, copies of
documentary evidence of the obligor's
indebtedness; or
" (ii) send a written explanation or clarification to
the obligor, after having conducted an
investigation, setting forth to the extent
applicable the reasons why the creditor
believes the account of the obligor was
correctly shown in the statement and, upon
request of the obligor, provide copies of
documentary evidence of the obligor's
indebtedness. In the case of a billing error
where the obligor alleges that the creditor's
billing statement reflects goods not
delivered to the obligor or his designee in
accordance with the agreement made at the
time of the transaction, a creditor may not
construe such amount to be correctly shown
unless he deten-nines that such goods were
actually delivered, mailed, or otherwise sent
to the obligor and provides the obligor with a
statement of such determination.
" After complying with the provisions of this subsection
with respect to an alleged billing error, a creditor
has no further responsibility under this section if the
obligor continues to make substantially the same
allegation with respect to such error.
" (b) For the purpose of this section, a 'billing error'
consists of any of the following:
" (1) A reflection on a statement of an extension of
credit which was not make to the obligor, or, if
made, was not in the amount reflected on such
statement.
" (2) A reflection on a statement of an extension of
credit for which the obligor requests additional
clarification including documentary evidence
thereof
" (3) A reflection on a statement of goods or services
not accepted by the obligor or his designee or
not delivered to the obligor or his designee in
accordance with the agreement made at the time
of a transaction.
" (4) The creditor's failure to reflect properly on a
statement a payment made by the obligor or a
credit issued tot he obligor.
" (5) A computation error or similar error of an
accounting nature of the creditor on a statement.
" (6) Any other error described in regulations of the
Board.
" (c) For the purposes of this section, 'action to collect
the amount or any part thereof, indicated by an
obligor under paragraph (2)'does not include the
sending of statements of account to the obligor
following written notice from the obligor as specified
under subsection (a), if"(1) the obligor's account is
not restricted or closed because of the failure of the
obligor to pay the amount indicated under
paragraph (2) of subsection (a), and "(2) the
creditor indicates the payment of such amount is
not required pending the creditor's compliance with
this section.
" Nothing in this section shall be construed to prohibit
any action by a creditor to collect any amount
which has not been indicated by the obligor to
contain a billing error.
" (d) Pursuant to regulations of the Board, a creditor
operating an open end consumer credit plan may
not, prior to the sending of the written explanation or
clarification required under paragraph (B) (ii),
restrict or close an account with respect to which
the obligor has indicated pursuant to subsection (a)
that he believes such account to contain a billing
error solely because of the obligor's failure to pay
the amount indicated to be in error. Nothing in this
subsection shall be deemed to prohibit a creditor
from applying against the credit limit on the obligor's
account the amount indicated to be in error.
" (e) Any creditor who fails to comply with the
requirements of this section or section 162 forfeits
any right to collect from the obligor the amount
indicated by the obligor under paragraph (2) of
subsection (a) of this section, and any finance
charges thereon, except that the amount required to
be forfeited under this subsection may not exceed
$50.
Layperson's Summary
Section 161 - Correction of Billing Errors
If you find what you believe to be a billing error in a
statement from your creditor, you must notify the creditor of
the amount and the reason you believe it is wrong. Do so in
writing.
The creditor has 90 days to investigate and correct the matter
or tell you that they believe it is correct. You can then
request proof, (copies of original invoices, etc.) that would
prove the amount is correct.
While the matter is in dispute, the creditor can not pursue
collecting the amount until the dispute is resolved and they
can not freeze or close your account simply because you
claim an error. However, if the account is a revolving charge
account, the amount in dispute can remain charged against
your credit limit until the investigation is complete; and once
the creditor has supplied you with proof, then they have
fulfilled this section of the law and can demand payment.
"§ 162. Regulation Of Credit Reports
" (a) After receiving a notice from an obligor as provided in
section 161 (a), a creditor or his agent may not directly
or indirectly threaten to report to any person adversely
on the obligor's credit rating or credit standing because
of the obligor's failure to pay the amount indicated by
the obligor under section 161 (a) (2), and such amount
may not be reported as delinquent to any third party
until the creditor has met the requirements of section
161 and has allowed the obligor the same number of
days (not less than ten) thereafter to make payment as
is provided under the credit agreement with the obligor
for the payment of undisputed amounts.
" (b) If a creditor receives a further written notice from an
obligor that an amount is still in dispute within the time
allowed for payment under subsection (a) of this
section, a creditor may not report to any third party that
the amount of the obligor is delinquent because the
obligor has failed to pay an amount which he has
indicated under section 161 (a) (2), unless the creditor
also reports that the amount is in dispute and, at the
same time, notifies the obligor of the name and
address of each party to whom the creditor is reporting
information concerning the delinquency.
" (c) A creditor shall report any subsequent resolution of any
delinquencies reported pursuant to subsection (b) to
the parties to whom such delinquencies were initially
reported.
Layperson's Summary
Section 162 - Regulation of Credit Reports
A creditor can not report a disputed amount negatively on
your credit file. As a matter of fact, they can't even threaten
to do so. The creditor must give you a minimum of 10 days
to make payment or provide response once they have sent
you written notice that the investigation regarding your
dispute is complete. If you still dispute the amount, the
creditor can report it as unpaid, but must also report that it is
being disputed. They must also tell you who they are
reporting that information to. Further, they must update its
reported status if the dispute is resolved.
"§ 163. Length Of Billing Period
" (a) If an open end consumer credit plan provides a time
period within which an obligor may repay any portion of
the credit extended without incurring an additional
finance charge, such additional finance charge may not
be imposed with respect to such portion of the credit
extended for the billing cycle of which such period is a
part unless a statement which includes the amount
upon which the finance charge for that period is based
was mailed at lest fourteen days prior to the date
specified in the statement by which payment must be
made in order to avoid imposition of that finance
charge.
" (b) Subsection (a) does not apply in any case where a
creditor has been prevented, delayed, or hindered in
making timely mailing or delivery of such periods
statement within the time period specified in such
subsection because of an act of God, war, natural
disaster, strike, or other excusable or justifiable cause,
as determined under regulations of the Board.
Layperson's Summary
Section 163 - Length of Billing Period
Look at the date on the postmark of your billing statement.
If your account is one on which no finance charge or other
charge is added before a certain due date, then creditors must
mail their statements at least 14 days before payment is
due—unless their is an earthquake, postal strike, war breaks
out or something of similar magnitude.
"§ 164. Prompt Crediting Of Payments
"Payments received from an obligor under an open end
consumer credit plan by the creditor shall be posted promptly
to the obligor's account as specified in regulations of the
Board. Such regulations shall prevent a finance charge from
being imposed on any obligor if the creditor has received the
obligor's payment in readily identifiable form in the amount,
manner, location, and time indicated by the creditor to avoid
the imposition thereof.
Layperson's Summary
Section 164 - Prompt Crediting of Payments
Look at the payment date entered on the statement. Creditors
must credit payment on the day it arrives, as long as you pay
according to payment instructions. This means, for example,
sending your payment to the address listed on the bill.
"§ 165. Crediting Excess Payments
"Whenever an obligor transmits funds to a creditor in excess
of the total balance due on an open end consumer credit
account, the creditor shall promptly (1) upon request of the
obligor refund the amount of the overpayment, or (2) credit
such amount to the obligor's account.
Layperson's Summary
Section 165 - Crediting Excess Payments
If a credit balance results on your account (for instance,
because you pay more than the amount you owe, or you
return a purchase and the purchase price is credited to you
account), the creditor must make a refund to you. The refund
must be made within 7 business days after your written
request, or automatically if the credit balance is still in
existence after six months.
"§ 166. Prompt Notification Of Returns
"With respect to any sales transaction where a credit card
has been used to obtain credit, where the seller is a person
other than the card issuer, and where the seller accepts or
allows a return of the goods or forgiveness of a debit for
services which were the subject of such sale, the seller shall
promptly transmit to the credit card issuer, a credit statement
with respect thereto and the credit card issuer shall credit the
account of the obligor for the amount of the transaction.
"§ 167. Use Of Cash Discounts
" (a) With respect to credit card which may be used for
extensions of credit in sales transactions in which the
seller is a person other than the card issuer, the card
issuer may not, by contract or otherwise, prohibit any
such seller from offering a discount to a cardholder to
induce the cardholder to pay by cash, check, or similar
means rather than use a credit card.
" (b) With respect to any sales transaction, any discount not
in excess of 5 per centum offered by the seller for the
purpose of inducing payment by cash, check, or other
means not involving the use of a credit card shall
constitute a finance charge as determined under
section 106m if such discount is offered to all
prospective buyers and its availability is disclosed to all
prospective buyers clearly and conspicuously in
accordance with regulations of the Board.
"§ 168. Prohibition Of Tie-In Services
"Notwithstanding any agreement to the contrary, a card
issuer may not require a seller, as a condition to participating
in a credit card plan, to open an account with or procure any
other service from the card issuer or its subsidiary or agent.
"§ 169. Prohibition Of Offsets
" (a) A card issuer may not take any action to offset a
cardholder's indebtedness arising in connection with a
consumer credit transaction under the relevant credit
card plan against funds of the cardholder held on
deposit with the card issuer unless" (1) such action was previously authorized in writing by
the cardholder in accordance with a credit plan
whereby the cardholder agrees periodically to pay
debts incurred in his open end credit account by
permitting the card issuer periodically to deduct all
or a portion of such debt from the cardholder's
deposit account, and
" (2) such action with respect to any outstanding
disputed amount not be taken by the card issuer
upon request of the cardholders
" In the case of any credit card account in existence
on the effective date of this section, the previous
written authorization referred to in clause (1)
shall not be required until the date (after such
effective date) when such account is renewed,
but in no case later than one year after such
effective date. Such written authorization shall
be deemed to exist if the card issuer has
previously notified the cardholder that the use of
his credit card account will subject any funds
which the card issuer holds in deposit accounts
of such cardholder to offset against any amounts
due and payable on his credit card account
which have not been paid in accordance with the
terms of the agreement between the card issuer
and the cardholders
" (b) This section does not alter or affect the right under
State law of a card issuer to attach or otherwise levy
upon funds of a cardholder held on deposit with the
card issuer if that remedy is constitutionally available to
creditors generally.
Layperson's Summary
Section 169 - Prohibition of Offsets
The institution that issues you a credit card may not seize
your savings or other accounts if you fail to pay the credit
card—unless the credit card agreement makes provision for
it, or your state laws makes it legal.
"§ 170. Rights Of Credit Card Customers
" (a) Subject to the limitation contained in subsection (b), a
card issuer who has issued a credit card to a
cardholder pursuant to an open end consumer credit
plan shall be subject to all claims (other than tort
claims) and defenses arising out of any transaction in
which the credit card is used as a method of payment
or extension of credit if (1) the obligor has made a good
faith attempt to obtain satisfactory resolution of a
disagreement or problem relative to the transaction
from the person honoring the credit card; (2) the
amount of the initial transaction exceeds $50; and (3)
the place where the initial transaction occurred was in
the same State as the mailing address previously
provided by the cardholder or was within 100 miles
from such address, except that the limitations set forth
in clauses (2) and (3) with respect to an obligor's right
to assert claims and defenses against a card issuer
shall not be applicable to any transaction in which the
person honoring the credit card (A) is the same person
as the card issuer, (B) is controlled by the card issuer,
(C) is under direct or indirect common control with the
card issuer, (D) is a franchised dealer in the card
issuer's products or services, or (E) had obtained the
order for such transaction through a mail solicitation
made by or participated in by the card issuer in which
the cardholder is solicited to enter into such transaction
by using the credit card issued by the card issuer.
" (b) The amount of claims or defenses asserted by the
cardholder may not exceed the amount of credit
outstanding with respect to such transaction at the time
the cardholder first notifies the card issuer of the
person honoring the credit card of such claim or
defense. For the purpose of determining the amount of
credit outstanding in the preceding sentence, payments
and credits to the cardholder's account are deemed to
have been applied, in the order indicated, to the
payment of- (1) late charges in the order of their entry
to the account; (2) finance charges in order of their
entry to the account; and (3) debits to the account other
than those set forth above, in the order in which each
debit entry to the account was made.
Layperson's Summary
Section 170 - Rights of Credit Card Customers
Your credit card issuer must credit you any amount over $50
for services or products returned or where a good faith
attempt was made by you to resolve a dispute with the
merchant—provided:
1) the transaction was within 100 miles of your listed billing
address; and
2) the merchant and the card issuer are not the same
company nor does the issuer have any control over, or supply
products to the merchant.
A subject related to this issue is that of lost or stolen credit
cards which are covered under the Truth in Lending Act.
Under the law, you do not have to pay for charges made after
you notify the card company of the missing card. So keep a
list of your credit card numbers handy and notify issuers
immediately if your card is lost or stolen.
Even if someone runs up hundreds of dollars in charges
before you notify the issuer of the card, your liability is
limited to $50 on each card.
IMPORTANT:
It's important to be aware of the potential risk in using an
EFT card (Electronic Fund Transfer), which differs from the
risk on a credit card.
On lost or stolen credit cards, your loss is limited to $50 per
card. On an EFT card, your liability for unauthorized
withdrawal can vary.
Your loss is limited to $50 if you notify the financial
institution within two business days after learning of loss or
theft of your card or code. But you could lose as much as
$500 if you don't tell the issuer within two business days
after learning of the missing card.
If you do not report an unauthorized transfer that appears on
your statement within 60 days after the statement is mailed to
you, you risk unlimited loss on transfers made after the
60-day period
"§ 171. Relation To Sate Laws
" (a) This chapter does not annul, alter, or affect, or exempt
any person subject to the provisions of this chapter
from complying with, the laws of any state with respect
to credit billing practices, except to the extent that those
laws are inconsistent with any provision of this chapter
if the Board determines that such law gives greater
protection to the consumer.
" (b) The Board shall by regulation exempt from the
requirements of his chapter any class of credit
transactions within any State if it determines that under
the law of that State that class of transactions is subject
to requirements substantially similar to those imposed
under this chapter or that such law gives greater
protection to the consumer, and that there is adequate
provision for enforcement."
"§ 307. Conforming Amendments
(a)The table of chapters of the Truth in Lending Act is
amended by adding immediately under item 3 the following:
"4. CREDIT BILLING........................................................
161
" (b)Section 11 (d) of such Act (15 U.S.C. 1610 (d) is
amended by striking out "and 130" and inserting in lieu
thereof a comma and the following: " 1 30, and 166".
" (c) Section 121 (a) of such Act (15 U.S.C.. 1610 (d) is
amended" (1 )by striking out "and upon whom a finance charge is
or
may be imposed"; and
" (2) by inserting "or chapter 4" immediately after "this
chapter".
" (d) Section 121 (b) of such Act (15 U.S.C. 1631 (b) ) is
amended by inserting "or chapter 4" immediately after
"this chapter".
" (e) Section 122 (a) of such Act (15 U.S.C. 1632 (a)) is
amended by inserting "or chapter 4" immediately after
"this chapter".
" (f) Section 122 (b) of such Act (15 U.S.C. 1632 (b) ) is
amended by inserting "or chapter 4" immediately after
"this chapter".
"§ 308. Effective Date
This title takes effect upon the expiration of one year after
the date of its enactment.
CHAPTER 4:
THE
EQUAL CREDIT
OPPORTUNITY
ACT
"THE EQUAL CREDIT OPPORTUNITY ACT"
The Consumer Credit Protection Act (Public Law 90-321) was
amended by adding at the end thereof a new title VII:
"TITLE VII - EQUAL CREDIT OPPORTUNITY
"Sec.
"701.
"702.
"703.
"704.
"705.
"706.
"707.
"708.
"709.
Prohibited discrimination.
Definitions.
Regulations.
Administrative enforcement.
Relation to State laws.
Civil liability.
Annual reports to Congress.
Effective date.
Short title.
"§ 701. Prohibited Discrimination; Reasons For
Adverse Action
" (a) It shall be unlawful for any creditor to discriminate
against any applicant, with respect to any aspect of a
credit transaction" (1) on the basis of race, color, religion, national origin,
sec or marital status, or age (provided the applicant
has the capacity to contract):
" (2) because all or part of the applicant's income
derives from any public assistance program: or
" (3) because the applicant has in good faith exercised
any right under the Consumer Credit Protection Act.
" (b) It shall not constitute discrimination for purposes of this
title for a creditor" (1) to make an inquiry of marital status if such inquiry
is for the purpose of ascertaining the creditor's
rights and remedies applicable to the particular
extension of credit and not to discriminate in a
determination of creditworthiness;
" (2) to make an inquiry of the applicant's age or of
whether the applicant's income derives from any
public assistance program if such inquiry is for the
purpose of determining the amount and probable
continuance of income levels, credit history, or
other pertinent element of creditworthiness as
provided in regulations of the Board:
" (3) to use any empirically derived credit system which
considers age if such system is demonstrably and
statistically sound in accordance with regulations of
the Board, except that in the operation of such
system of the age of an elderly applicant may not
be assigned a negative factor or value; or
" (4) to make an inquiry or to consider the age of an
elderly applicant when the age of such applicant is
to be used by the creditor in the extension of credit
in favor of such applicant.
" (c) It is not a violation of this section for a creditor to refuse
to extend credit offered pursuant to-
" (1) any credit assistance program expressly authorized
by law for an economically disadvantaged class of
persons:
" (2) any credit assistance program administered by a
nonprofit organization for its members or an
economically disadvantaged class of persons; or
" (3) any special purpose credit program offered by a
profitmaking organization to meet special social
needs which meets standards prescribed in
regulations by the Board: if such refusal is required
by or made pursuant to such program.
" (d)
(1) Within thirty days (or such longer reasonable
time as specified in regulations of the Board for any
class of credit transaction) after receipt of a completed
application for credit, a creditor shall notify the applicant
of its action on the application.
" (2) Each applicant against whom adverse action is
taken shall be entitled to a statement of reasons for
such action from the creditor. A creditor satisfies
this obligation by
" (A) providing statements of reasons in writing as a
matter of course to applicants against whom
adverse action is taken; or
" (B) giving written notification of adverse action
which discloses (i) the applicant's right to a
statement of reasons within thirty days after
receipt by the creditor of a request made within
sixty days after such notification, and (ii) the
identity of the person or office from which such
statement may be obtained. Such statement
may be given orally if the written notification
advises the applicant of his right to have the
statement of reasons confirmed in writing on
written request.
" (3) A statement of reasons meets the requirements of
this section only if it contains the specific reasons
for the adverse action taken.
" (4) Where a creditor has been requested by a third
party to make a specific extension of credit directly
or indirectly to an applicant, the notification and
statement of reasons required by this subsection
may be made directly by such creditor, or indirectly
through the third party, provided in either case that
the identity of the creditor is disclosed.
" (5) The requirements of paragraph (2), (3), or (4) may
be satisfied by verbal statements or notifications in
the case of any creditor who did not act on more
that one hundred and fifty applications during the
calendar year preceding the calendar year in which
the adverse action is taken, as determined under
regulations of the Board.
" (6) For purposes of this subsection, the term 'adverse
action' means a denial or revocation of credit, a
change in the terms of an existing credit
arrangement, or a refusal to grant credit in
substantially the amount or on substantially the
terms requested. Such term does not include a
refusal to extend additional credit under an existing
credit arrangement where the applicant is
delinquent or otherwise in default, or where such
additional credit would exceed a previously
established credit limit." (Amended by Act of
3/23/76, P.L. 94-239, eff. 3/23/77.)
Layperson's Summary
Section 701 - Prohibited Discrimination
The Equal Credit Opportunity Act does not guarantee that
you will get credit. You must still pass the creditor's tests of
creditworthiness. But the creditor must apply these tests
fairly, impartially, and without discriminating against you on
any of the following grounds: age, gender, marital status,
race, color, religion, national origin, because you receive
public income such as veterans' benefits, welfare or Social
Security, or because you exercise your rights under Federal
credit laws such as filing a billing error notice with a
creditor. This means that a creditor may not use any of those
grounds as a reason to:
1) discourage you from applying for a loan;
2) refuse you a loan if you qualify; or
3) lend you money on terms different from those granted
another person with similar income, expenses, credit history,
and collateral.
Under the law, you must be notified within 30 days after
your application has been completed whether your loan has
been approved or not. If credit is denied, this notice must be
in writing and it must explain the specific reasons why your
application was denied—or tell you of your right to ask for
an explanation. You have the same rights if an account you
have is closed.
NOTE: Regulation B of the Equal Credit Opportunity Act
goes into great detail about prohibited discrimination.
You will find it in its entirety in Chapter 5, along with a
layperson's summary.
"§ 702. Definitions
" (a) The definitions and rules of construction set forth in this
section are applicable for the purposes of this title.
" (b) The term 'applicant' means any person who applies to a
creditor directly for an extension, renewal, or
continuation of credit, or applies to a creditor indirectly
by use of an existing credit plan for an amount
exceeding a previously established credit limit.
" (c) The term 'Board' refers to the Board of Governors of
the Federal Reserve System.
" (d) The term 'credit' means the right granted by a creditor
to a debtor to defer payment of debt or to incur debts
and defer its payment or to purchase property or
services and defer payment therefore.
" (e) The term 'creditor' means any person who regularly
arranges for the extension, renewal, or continuation of
credit; or any assignee of an original creditor who
participates in the decision to extend, renew, or
continue credit.
" (f)) The term 'person' means a natural person, a
corporation, government or governmental subdivision
agency, trust, estate, partnership, cooperative, or
association.
" (g) Any reference to any requirement imposed under this
title or any provision thereof includes reference to the
regulations of the Board under this title or the provision
thereof in question.
"§ 703. Regulations
" (a) The Board shall prescribe regulations to carry out the
purposes of this title. These regulations may contain
but are not limited to such classifications,
differentiation, or other provision, and may provide for
such adjustments and exceptions for any class of
transactions, as in the judgment of the Board are
necessary or proper to effectuate the purposes of this
title, to prevent circumvention or evasion thereof, or to
facilitate or substantiate compliance therewith. Such
regulations shall be prescribed as soon as possible
after the date of enactment of this act, but in no event
later than the effective date of this Act. In particular,
such regulations may exempt from one or more of the
provisions of this title any class of transactions not
primarily for personal, family, or household purposes., if
the Board makes an express finding that the
application of such provision or provisions would not
contribute substantially to carrying out the purposes of
this title.
" (b) The Board shall establish a Consumer Advisory
Council to advise and consult with it in the exercise of
its functions under the Consumer Credit Protection Act
and to advise and consult with it concerning other
consumer related matters it may place before the
Council. In appointing the members of the Council, the
Board shall seek to achieve a fair representation of the
interests of creditors and consumers. The Council
shall meet from time to time at the call of the Board.
Members of the Council who are not regular full-time
employees of the United States shall, while attending
meetings of such Council, be entitled to receive
compensation at a rate fixed by the Board, but not
exceeding $100 per day, including travel time. Such
members may be allowed travel expenses, including
transportation and subsistence, while away from their
homes or regular place of business. (Amended by Act
of 3/23/76, P.L. 94-239, eff. 3/23/77.)
"§ 704. Administrative Enforcement
" (a) Compliance with the requirements imposed under this
title shall be enforced under:
" (1) Section 8 of the Federal Deposit Insurance Act, in
the case of
" (A) national banks, by the Comptroller of the
Currency,
" (B) member banks of the Federal Reserve System
(other than national banks), by the Board,
" (C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal
Reserve System), by the Board of Directors of
the Federal Deposit Insurance Corporation.
" (2) Section 5 (d) of the Home Owners' Loan Act of
1933, section 407 of the National Housing Act, and
sections 6 (i) and 17 of the Federal Home Loan
Bank Act, by the Federal Home Loan Bank Board
(acting directly or through the Federal Savings and
Loan Insurance Corporation), in the case of any
institution subject to any of those provisions.
" (3) The Federal Credit Union Act, by the Administrator
of the National Credit Union Administration with
respect to any Federal Credit Union.
" (4) The Acts to regulate commerce, by the Interstate
Commerce Commission with respect to any
common carrier subject to those Acts.
" (5) The federal Aviation Act of 1958, by the Civil
Aeronautics Board with respect to any air carrier or
foreign air carrier subject to that Act.
" (6) The packers and Stockyards Act, 1921 (except as
provided in section 406 of that Act), by the
Secretary of Agriculture with respect to any
activities subject to that Act.
" (7) The Farm Credit Act of 197 1, by the Farm Credit
Administration with respect to any Federal land
bank, Federal land bank association, Federal
intermediate credit bank, and production credit
association;
" (8) The securities Exchange Act of 1934, by the
Securities and Exchange Commission with respect
to brokers an dealers; and
" (9) The Small Business Investment Act of 1958, by the
Small Business Administration, with respect to
small business investment companies.
" (b) For the purpose of the exercise by any agency referred
to in subsection (a) of its powers under any Act referred
to in that subsection, a violation of any requirement
imposed under this title shall be deemed to be a
violation of a requirement imposed under that Act. In
addition to its powers under any provision of law
specifically referred to in subsection (a), each of the
agencies referred to in that subsection may exercise for
the purpose of enforcing compliance with any
requirement imposed under this title, any other
authority conferred on it by law. The exercise of the
authorities of any of the agencies referred to in
subsection (a) for the purpose of enforcing compliance
with any requirement imposed under this title shall in
no way preclude the exercise of such authorities for the
purpose of enforcing compliance with any other
provision of law not relating to the prohibition of
discrimination on the basis of sex or marital status with
respect to any aspect of a credit transaction.
" (c) Except to the extent that enforcement of the
requirements imposed under this title is specifically
committed to some other Government agency under
subsection (a), the Federal Trade Commission shall
enforce such requirements. For the purpose of the
exercise by the Federal Trade Commission Act, a
violation of any requirement imposed under this title
shall be deemed a violation of a requirement imposed
under that Act. All of the functions and powers of the
Federal Trade Commission under the Federal Trade
Commission Act are available to the Commission to
enforce compliance by any person with the
requirements imposed under this title, irrespective
whether that person is engaged in commerce of meets
any other jurisdictional tests in the Federal Trade
Commission Act including the power to enforce any
Federal Reserve Board regulation promulgated under
this title in the same manner as if the violation had
been a violation of a Federal Trade Commission trade
regulation rule.
" (d) The authority of the Board to issue regulations under
this title does not impair the authority of any other
agency designated in this section to make rules
respecting its own procedures in enforcing compliance
with requirements imposed under this title.
"§ 705. Relation To State Laws
" (a) A request for the signature of both parties to a marriage
for the purpose of creating valid lien, passing clear title,
waiving inchoate rights to property, or assigning
earnings, shall not constitute discrimination under this
title; Provided, however. That this provision shall not
be construed to permit a creditor to take sex or marital
status into account in connection with the evaluation of
creditworthiness of any applicant.
" (b) Consideration or application of State property laws
directly or indirectly affecting creditworthiness shall not
constitute discrimination for purposes of this title.
" (c) Any provision of State law which prohibits the separate
extension of consumer credit to each party to a
marriage shall not apply in any case where each party
to a marriage voluntarily applies for separate credit
from the same creditor: Provided, That in any case
where such a State law is so preempted, each party to
the marriage shall be solely responsible for the debt so
contracted.
" (d) When each party to a marriage separately and
voluntarily applies for and obtains separate credit
accounts with the same creditor, those accounts shall
not be aggregated or otherwise combined for purposes
of determining permissible finance charges or
permissible finance charges or permissible loan
ceilings under the laws of any State or of the United
States.
" (e) Where the same act or omission constitutes a violation
of this title and of applicable State law, a person
aggrieved by such conduct may bring a legal action to
recover monetary damages either under this title or
under such State law, but not both. This election of
remedies shall not apply to court actions in which the
relief sought does not include monetary damages or to
administrative actions.
" (f) This title does not annul, alter, or affect, or exempt any
person subject to the provisions of this title from
complying with, the laws of any State with respect to
credit discrimination, except to the extent that those
laws are inconsistent with any provision of this title if
the Board determines that such law gives greater
protection to the applicant.
" (g) The Board shall by regulation exempt from the
requirements of sections 701 and 702 of this title any
class of credit transactions within any State if it
determines that under the law of that State that class of
transactions is subject to requirements substantially
similar to those imposed under this title or that such law
gives greater protection to the applicant, and that there
is adequate provision for enforcement. Failure to
comply with any requirement of such State law in any
transaction so exempted shall constitute a violation of
this title for the purposes of section 705. (Amended by
Act of 3/23/76, P.L. 94-239, eff. 3/23/77.)
"§ 706. Civil Liability
" (a) Any creditor who fails to comply with any requirement
imposed under this title shall be liable to the aggrieved
applicant for any actual damages sustained by such
applicant acting either in an individual capacity or as a
member of class.
" (b) Any creditor, other than a government or governmental
subdivision or agency, who fails to comply with any
requirement imposed under this title shall be liable to
the aggrieved applicant for punitive damages in an
amount not greater than $10,000, in addition to any
actual damages provided in subsection (a), except that
in the case of a class action the total recovery under
this subsection shall not exceed the lesser of $500,000
or I per centum of the net worth of the creditor. In
determining the amount of such damages in any action,
the court shall consider, among other relevant factors,
the amount of any actual damages awarded, the
frequency and persistence of failures of compliance by
the creditor, the resources of the creditor, the number
of persons adversely affected, and the extent to which
toe creditor's failure of compliance was intentional.
" (c) Upon application by an aggrieved applicant, the
appropriate United States district court or any other
court of competent jurisdiction may grant such
equitable and declaratory relief as is necessary to
enforce the requirements imposed under this title.
" (d) In the case of any successful action under subsection
(a), (b), or (c)., the costs of the action, together with a
reasonable attorney's fee as determined by the court,
shall be added to any damages awarded by the court
under such subsection.
" (e) No provision of this title imposing liability shall apply to
any act done or omitted in good faith in conformity with
any official rule, regulation, or interpretation thereof by
the Board or in conformity with any interpretation or
approval by an official or employee of the Federal
Reserve System duly authorized by the Board to issue
such interpretations or approvals under such
procedures as the Board may prescribe therefor,
notwithstanding that after such act or omission has
occurred, such rule, regulation, interpretation, or
approval is amended, rescinded, or determined by
judicial or other authority to be invalid for any reason.
" (f) Any action under this section may be brought in the
appropriate United States district court without regard
to the amount in controversy, or in any other court of
competent jurisdiction. No such action shall be brought
later than two years from the date of the occurrence of
the violation, except that
" (1) whenever any agency having responsibility for
administrative enforcement under section 704
commences an enforcement proceeding within two
years from the date of the occurrence of the
violation.
" (2) whenever the Attorney General commences a civil
action under this section within two years from the
date of the occurrence of the violation, then any
applicant who has been a victim of the
discrimination which is the subject of such
proceeding or civil action may bring an action under
this section not later than one year after the
commencement of that proceeding or action.
" (g) The agencies having responsibility for administrative
enforcement under section 704, if unable to obtain
compliance with section 701, are authorized to refer the
matter to the Attorney General with recommendation
that an appropriate civil action be instituted.
" (h) When a matter is referred to the Attorney General
pursuant to subsection (g), or whenever he has reason
to believe that one or more creditors are engaged in a
pattern or practice in violation of this title, the Attorney
General may bring a civil action in any appropriate
United States district court for such relief as may be
appropriate, including injunctive relief.
" (i) No person aggrieved by a violation of this title and by a
violation of section 805 of the Civil Rights Act of 1968
shall recover under this title and section 812 of the Civil
Rights Act of 1968, it such violation is based on the
same transaction.
" (j) Nothing in this title shall be construed to prohibit the
discovery of a creditor's credit granting standards under
appropriate discovery procedures in the court or
agency in which an action or proceeding is brought..
(Amended by Act of 3/23/76, P.L. 94-239, eff. 3/23/77.)
"§ 707. Annual Reports To Congress
"Not later than February I of each year after 1976, the Board
and the Attorney General shall, respectively, make reports to
the Congress concerning the administration of their functions
under this title, including such recommendations as the Board
and the Attorney General, respectively, deem necessary or
appropriate. In addition, each report of the Board shall include
its assessment of the extent to which compliance with the
requirements of this title is being achieved, and a summary of
the enforcement actions taken by each of the agencies
assigned administrative enforcement responsibilities under
section 704. (Amended by Act of 3/23/76, P.L. 94-239, eff.
3/23/77.)
"§ 708. Effective Date
"This title takes effect upon the expiration of one year after
the date of its enactment. The amendments made by the
Equal Credit Opportunity Act Amendments of 1976 shall take
effect on the date of enactment thereof and shall apply to any
violation occurring on or after such date, except that the
amendments made to section 701 of the Equal Credit
Opportunity Act shall take effect 12 months after the date of
enactment.
3/23/77.)
(Amended by Act of 3/23/76, P.L. 94-239, eff.
"§ 709. Short Title
"This title may be cited as the 'Equal Credit Opportunity Act."
CHAPTER 5:
REGULATION "B"
OF THE EQUAL CREDIT
OPPORTUNITY ACT
Regulation B
Part 202-Equal Credit Opportunity
(12CFR, Part 202, Fed. Reg. 48018)
Sec.
202.1 Authority, scope, and purpose.
202.2 Definitions.
202.3 Limited exceptions for certain classes of transactions.
202.4 General rule prohibiting discrimination.
202.5 Rules concerning taking of applications.
202.6 Rules concerning evaluation of applications.
202.7 Rules concerning extensions of credit.
202.8 Special purpose credit programs.
202.9 Notifications.
202.10 Furnishing of credit information.
202.11 Relation to state law.
202.12 Record retention.
202.13 Information for monitoring purposes.
202.14 Enforcement, penalties, and liabilities.
Appendix A: Federal Enforcement Agencies
"§ 202.1 Authority, Scope, And Purpose
" (a) Authority and Scope
This regulation is issued by the Board of Governors of
the Federal Reserve System pursuant to title VII (Equal
Credit Opportunity Act) of the Consumer Credit
Protection Act, as amended (15 U.S.C. 1601 et seq.).
Except as otherwise provided herein, the regulation
applies to all persons who are creditors, as defined in
202.2(l). Information collection requirements contained
in this regulation have been approved by the Office of
Management and Budget under the provisions of 44
U.S.C. 3501 et seq. and have been assigned OMB No.
7100-0201.
" (b) Purpose
The purpose of this regulation is to promote the
availability of credit to all creditworthy applicants
without regard to race, color, religion, national origin,
sex, marital status, or age (provided the applicant has
the capacity to contract); to the fact that all or part of
the applicant's income derives from a public assistance
program; or to the fact that the applicant has in good
faith exercised any right under the Consumer Credit
Protection Act.
The regulation prohibits creditor
practices that discriminate on the basis of any of these
factors. The regulation also required creditors to notify
applicants of action taken on their applications; to
report credit history in the names of both spouses on
an account; to retain records of credit applications; and
to collect information about the applicant's race and
other personal characteristics in applications for certain
dwelling related loans.
"§ 202.2 Definitions
For the purposes of this regulation, unless the context
indicates otherwise, the following definitions apply.
" (a) Account means an extension of credit.
When
employed in relation to an account, the word use refers
only to an open-end credit.
" (b) Act means the Equal Credit Opportunity Act (title VII of
the Consumer Credit Protection Act).
" (c) Adverse Action.
" (1) The term means:
" (i) A refusal to grant credit in substantially the
amount or on substantially the terms requested
in an application unless the creditor makes a
counteroffer (to grant credit in a different amount
or on other terms) and the applicant uses or
expressly accepts the credit offered;
" (ii) A termination of an account or an unfavorable
change in the terms of an account that does not
affect all or a substantial portion of a class of the
creditor's accounts; or
" (iii) A refusal to increase the amount of credit
available to an applicant who has made an
application for an increase.
" (2) The term does not include:
" (i) A change in the terms of an account expressly
agreed to by an applicant;
" (ii) Any action or forbearance relating to an account
taken in connection with inactivity, default, or
delinquency as to that account;
" (iii) A refusal or failure to authorize an account
transaction at a point of sale, or loan, except
when the refusal is a termination or an
unfavorable change in the terms of an account
that does not affect all or a substantial portion of
a class of the creditor's accounts, or when the
refusal is a denial of an application for an
increase in the amount of credit available under
the account;
" (iv) A refusal to extend credit because applicable
law prohibits the credit from extending the credit
request; or
" (v) A refusal to extend credit because the creditor
does not offer the type of credit or credit plan
requested.
" (3) An action that falls within the definition of both
paragraphs (c) (1) and (c) (2) of this section is
governed by paragraph (c) (2).
" (d) Age refers only to the age of natural persons and
means the number of fully elapsed years from the date
of an applicant's birth.
" (e) Applicant means any person who requests or who has
received an extension of credit from a creditor, and
includes any person who is or may become
contractually liable regarding an extension of credit.
For purposes of 202.7(d), the term includes guarantors,
sureties, endorsers, and similar parties.
" (f) Application means an oral or written request for an
extension of credit that is made in accordance with
procedures established by a creditor for the type of
credit requested. The term does not include the use of
an account or line of credit to obtain an amount of
credit that is within a previously established credit limit.
A completed application means an application in
connection with which a creditor has received all the
information that the creditor regularly obtains and
considers in evaluating applications for the amount and
type of credit requested from the applicant, and any
additional information requested from the applicant,
and any approvals or reports by governmental
agencies or other persons that are necessary to
guarantee, insure, or provide security for the credit or
collateral. The creditor shall exercise reasonable
diligence in obtaining such information.
" (g) Board means the Board of Governors of the Federal
Reserve System.
" (h) Consumer credit means extended to a natural person
primarily for personal, family, or household purposes.
" (i) Contractually liable means expressly obligated to repay
all debts arising on an account by reason of an
agreement to that effect.
" (j) Credit means the right granted by a creditor to an
applicant to defer payment of a debt, incur debt and
defer its payment, or purchase property or services and
defer payment thereof.
" (k) Credit card means any card, plate, coupon book, or
other single credit device that may be used from time to
time to obtain money, property, or services on credit.
" (l) Creditor means a person who, in the ordinary course of
business, regularly participates in the decision of
whether or not to extend credit. The term includes a
creditor's assignee, transferee, or subrogee who so
participates. For purposes of 202.4 and 202.5(a), the
term also includes a person who, in the ordinary course
of business, regularly refers applicants or prospective
applicants to creditors, or selects or offers to select
creditors to whom requests for credit may be made. A
person is not a creditor regarding any violation of the
act or this regulation committed by another creditor
unless the person knew or had reasonable notice of the
act, policy, or practice that constituted the violation
before becoming involved in the credit transaction. The
term does not include a person whose only
participation in a credit transaction involves honoring a
credit card.
" (m) Credit transaction means every aspect of an
applicant's dealings with a creditor regarding an
application for credit or an existing extension of credit
(including, but not limited to, information requirements;
investigation
procedures;
standards
of
creditworthiness; terms of credit; furnishing of credit
information; revocation, alteration, or termination of
credit; and collection procedures).
" (n) Discriminate against an applicant means to treat an
applicant less favorably than other applicants.
" (o) Elderly means age 62 or older.
" (p) Empirically derived and other credit scoring systems.
" (1) A credit scoring system is a system that evaluates
an applicant's creditworthiness mechanically, based
on key attributes of the applicant and aspects of the
transaction, and that determines, alone or in
conjunction with an evaluation of additional
information about the applicant, whether an
applicant is deemed creditworthy. To qualify as an
empirically derived, demonstrably and statistically
sound credit scoring system, the system must be:
" (i) Based on data that are derived from an empirical
comparison of sample groups or the population
of creditworthy and noncreditworthy applicants
who apply for credit within a reasonable
preceding period of time;
" (ii) Developed for the purpose of evaluating the
creditworthiness of applicants with respect to the
legitimate business interests of the creditor
utilizing the system (including, but not limited to,
minimizing bad debt losses and operating
expenses in accordance with the creditor's
business judgment);
" (iii) Developed and validated using accepted
statistical principles and methodology and
adjusted as necessary to maintain predictive
ability.
" (2) A creditor may use an empirically derived,
demonstrably and statistically sound credit scoring
system obtained from another person or may obtain
credit experience from which to develop such a
system. Any such system must satisfy the criteria
set forth in paragraph (p)(1)(i) through (iv) of this
section; if the creditor is unable during the
development process to validate the system based
on its own credit experience in accordance with
paragraph (p)(1) of this section, the system must be
validated when sufficient credit experience
becomes available. A system that fails this validity
test is no longer an empirically derived,
demonstrably and statistically sound credit scoring
system for that creditor.
" (q) Extend credit and extension for credit mean the
granting of credit in any form (including, but not limited
to, credit granted in addition to any existing credit or
credit limit; credit granted pursuant to an open-end
credit plan; the refinancing or other renewal of credit;
including the issuance of a new credit card in place of
an expiring credit card or in substitution for an existing
credit card; the consolidation of two or more
obligations; or the continuance of existing credit without
any special effort to collect at or after maturity).
" (r) Good faith means honesty in fact in the conduct or
transaction.
" (s) Inadvertent error means a mechanical, electronic, or
clerical error that a creditor demonstrates was not
intentional
and
occurred
notwithstanding
the
maintenance of procedures reasonably adapted to
avoid such errors.
" (t) Judgmental system of evaluating applicants means any
system for evaluating the creditworthiness of an
applicant other than an empirically derived,
demonstrably and statistically sound credit scoring
system.
" (u) Marital status means the state of being unmarried,
married, or separated, as defined by applicable state
law. The term "unmarried" includes persons who are
single, divorced, or widowed.
" (v) Negative factor or value, in relation to the age of elderly
applicants, means utilizing a factor, value, or weight
that is less favorable regarding elderly applicants than
the creditor's experience warrants or is less favorable
than the factor, value, or weight assigned to the class
of applicants that are not classified as elderly and are
most favored by a creditor on the basis of age.
" (w) Open-end credit means credit extended under a plan
by which a creditor may permit an applicant to make
purchases or obtain loans from time to time directly
from the creditor or indirectly by use of a credit card,
check, or other device.
" (x) Person means a natural person, corporation,
government or governmental subdivision or agency,
trust, estate, partnership, cooperative, or association.
" (y) Pertinent element of creditworthiness, in relation to a
judgmental system of evaluating applicants, means any
information about applicants that a creditor obtains and
considers and that has a demonstrable relationship to a
determination of creditworthiness.
" (z) Prohibited basis means race, color, religion, national
origin, sex, marital status, or age (provided that the
applicant has the capacity to enter into a binding
contract); the fact that all or part of the applicant's
income derives from any public assistance program; or
the fact that the applicant has in good faith exercised
any right under the Consumer Credit Protection Act or
any state law upon which an exemption has been
granted by the Board.
" (aa) State means any State, the District of Columbia, the
Commonwealth of Puerto Rico or any territory or
possession of the United States.
"§ 202.3 Limited Exceptions For Certain Classes Of
Transaction
" (a) Public utilities credit.
" (1) Definition. Public utilities credit refers to extensions
of credit that involve public utility services provided
through pipe, wire, or other connected facilities, or
radio or similar transmissions (including extensions
of such facilities), if the charges for service, delayed
payment, and any discount for prompt payment are
filed with or regulated by a government unit.
" (2) Exceptions.
The following provisions of this
regulation do not apply to public utilities credit:
" (i) Section 202.5 (d)(1) concerning information
about marital status;
" (ii) Section 202.10 relating to furnishing of credit
information; and
" (iii) Section 202.12(b) relating to record retention.
" (b) Securities credit
" (1) Definition. Securities credit refers to extensions of
credit subject to regulation under section 7 of the
Securities Exchange Act of 1934 or extensions of
credit by a broker or dealer subject to regulation as
a broker or dealer under the Securities Exchange
Act of 1934
" (2) Exceptions.
The following provisions of this
regulation do not apply to securities credit:
" (i) Section 202.5(c) concerning information about a
spouse or former spouse;
" (ii) Section 202.5(d)(1) concerning information
about marital status;
" (iii) Section 202.5(d)(3) concerning information
about the sex of an applicant;
" (iv) Section 202.7(b) relation to designation of
name, but only to the extent necessary to
prevent violation or rules regarding an account in
which a broker or dealer has an interest, or rules
necessitating the aggregation of accounts of
spouses for the purpose of determining
controlling
interests,
beneficial
interests,
beneficial ownership, or purchase limitations and
restrictions;
" (v) Section 202.7(c) relating to action concerning
open-end accounts, but only to the extent the
action taken is on the basis of a change of name
or marital status;
" (vi) Section 202.7(d) relating to the signature of a
spouse or other person;
" (vii) Section 202.10 relating to furnishing of credit
information; and
" (viii) Section 202.12(b) relating to record retention.
" (c) Incidental credit.
" (1) Definition. Incidental credit refers to extensions of
consumer credit other than credit of the types
described in paragraphs (1) and (b) of this section:
" (i) That are not made pursuant to the terms of a
credit card account:
" (ii) That are not subject to a finance charge (as
defined in Regulation Z, 12CFR 226.4); and
" (iii) That are not payable by agreement in more than
four installments.
" (2) Exceptions.
The following provisions of this
regulation do not apply to incidental credit;
" (i) Section 202.5(c) concerning information about a
spouse or former spouse;
" (ii) Section 202.5(d)(1) concerning information
about marital status;
" (iii) Section 202.5(d)(2) concerning information
about income derived from alimony, child
support, or separate maintenance payments;
" (iv) Section 202.5(d)(3) concerning information
about the sex of an applicant, but only to the
extent necessary for medical records or similar
purposes;
" (v) Section 202.7(d) relating to the signature of a
spouse or other person;
" (vi) Section 202.9 relating to notifications;
" (vii) Section 202.10 relating to furnishing of credit
information; and
" (viii) Section 202.12(b) relation to record retention.
" (d) Business credit.
" (1) Definition. Business credit refers to extensions of
credit primarily for business or commercial
(including agricultural) purposes, but excluding
extensions of credit of the types described in
paragraphs (a) and (b) of this section.
" (2) Exceptions.
The following provisions of this
regulation do not apply to business credit: (i)
Section 202.5(d)(1) concerning information about
marital status; and
" (ii) Section 202.10 relating to furnishing of credit
information.
" (3) Modified requirements. The following provisions of
this regulation apply to business credit as specified
below:
" (i) Section 202.9 (a), (b), and (c) relating to
notifications; the creditor shall notify the
applicant, orally or in writing, of action taken of
incompleteness. When credit is denied or
when other adverse action is taken, the
creditor is required to provide a written
statement of the reasons and the ECOA
notice specified in section 202.9(b) if the
applicant makes a written request for the
reasons within 30 days of that notification; and
" (ii) Section 202.12(b) relating to record retention;
the creditor shall retain records as provided in
202.12(b) if the applicant, within 90 days after
being notified of action taken or of
incompleteness, requests in writing that
records be retained.
" (e) Government credit.
" (1) Definition. Government credit refers to extensions
of credit made to governments or governmental
subdivisions, agencies, or instrumentalities.
" (2) Applicability of regulation. Except for section 202.4
the general rule prohibiting discrimination of a
prohibited basis, the requirements of this regulation
do not apply to government credit.
"§ 202.4 General Rule Prohibiting Discrimination
A creditor shall not discriminate against an applicant on a
prohibited basis regarding any aspect of a credit transaction.
"§ 202.5 Rules Concerning Taking Of Applications
" (a) Discouraging applications. A creditor shall not make
any oral or written statement, in advertising or
otherwise, to applicants or prospective applicants that
would discourage on a prohibited basis a reasonable
person from making or pursuing an application.
" (b) General rules concerning requests for information. (1)
Except as provided in paragraphs (c) and (d) of this
section, a creditor may request any information in
connection with an application.
" (2) Required collection of information. Notwithstanding
paragraphs (c) and (d) of this section, a creditor
shall request information for monitoring purposes as
required by 202.13 for credit secured by the
applicant's dwelling. In addition, a creditor may
obtain information required by a regulation, order, or
agreement issued by, or entered into with, a court
or an enforcement agency (including the Attorney
General of the United States or a similar state
official) to monitor or enforce compliance with the
act, this regulation, or other federal or state statute
or regulation.
" (3) Specified purpose credit. A creditor may obtain
information that is otherwise restricted to determine
eligibility for a special purpose credit program, as
provided in 202.8(c) and (d).
" (c) Information about a spouse or former spouse.
" (1) Except as permitted in this paragraph, a creditor
may not request any information concerning the
spouse or former spouse of an applicant.
" (2) Permissible inquiries. A creditor may request any
information concerning an applicant's spouse (or
former spouse) under paragraph (c)(2)(v) that may
be requested about the applicant if " (i) The spouse will be permitted to use the account;
" (ii) The spouse will be contractually liable on the
account;
" (iii) The applicant is relying on the spouse's income
as a basis for repayment of the credit requested;
" (iv) The applicant resides in a community property
state or property on which the applicant is relying
as a basis for repayment of the credit requested
is located in such a state; or
" (v) The applicant is relying on alimony, child
support, or separate maintenance payments
from a spouse or former spouse as basis for
repayment of the credit requested.
" (3) Other accounts of the applicant. A creditor may
request an applicant to list any account upon which
the applicant is liable and to provide the name and
address in which the account is carried. A creditor
may also ask the names in which an applicant has
previously received credit.
" (d) Other limitations on information requests.
" (1) Marital status. If an applicant applies for individual
unsecured credit, a creditor shall not inquire about
the applicant's marital status unless the applicant
resides in a community property state or is relying
on property located in such a state as a basis for
repayment of the credit requested. If an application
is for other than individual unsecured credit, a
creditor may inquire about the applicant's marital
status, but shall use only the terms "married,"
"unmarried," and "separated." A creditor may
explain that the category "unmarried" includes
single, divorced, and widowed persons.
" (2) Disclosure about income from alimony, child
support, or separate maintenance. A creditor shall
not inquire whether income stated in an application
is derived from alimony, child support, or separate
maintenance payments unless the creditor
discloses to the applicant that such income need
not be revealed if the applicant does not want the
creditor to consider it in determining the applicant's
creditworthiness.
" (3) Sex. A creditor shall not inquire about the sex of
an applicant. An applicant may be requested to
designate a title on an application form (such as
Ms. Miss, Mr., or Mrs.) If the form discloses that the
designation of a title is optional. An applicant form
shall otherwise use only terms that are neutral as to
sex.
" (4) Childbearing, child-rearing. A creditor shall not
inquire about birth control practices, intentions
concerning the bearing or rearing of children, or
capability to bear children. A creditor may inquire
about the number and ages of an applicant's
dependents or about dependent-related financial
obligations or expenditures, provided such
information is requested without regard to sex,
marital status, or any other prohibited basis.
" (5) Race, color, religion, national origins. A creditor
shall not inquire about the race, color, religion, or
national origin of an applicant or any other person in
connection with a credit transaction. A creditor may
inquire about an applicant's permanent residence
and immigration status.
" (e) Written applications. A creditor shall take written
applications for the types of credit covered by
202.13 (a), but need not take written applications
for other types of credit.
Layperson's Summary
There is a good deal of overlap between these sections:
Section 202.5, Taking Applications
Section 202.6, Evaluating Applications
Section 202.7, Extending Credit
Many of the same reasons that a creditor can not refuse to
take (accept) an application also apply to evaluating the
application, and extending credit to the applicant. For better
understanding and as a convenience to the reader, an
overview summary of these three sections follows Section
202.7.
"§ 202.6 Rules Concerning Evaluation Of Applications
" (a) General rule concerning use of information. Except as
otherwise provided in the act and this regulation, a
creditor may consider information obtained, so long as
the information is not used to discriminate against an
applicant on a prohibited basis.
" (b) Specific rules concerning use of information.
" (1) Except as provided in the act and this regulation, a
creditor shall not take a prohibited basis into
account in any system of evaluating the,
creditworthiness of applicants.
" (2) Age, receipt of public assistance. (i) Except as
permitted in this paragraph (b) (2), a creditor shall
not take into account an applicant's age (provided
that the applicant has the capacity to enter into a
binding contract) or whether an applicant's income
derives from any public assistance program.
" (ii) In an empirically derived, demonstrably and
statistically sound credit scoring system, a
creditor may use an applicant's age as a
predictive variable, provided that the age of an
elderly applicant is not assigned a negative
factor or value.
" (iii) In a judgmental system of evaluating
creditworthiness, a creditor may consider an
applicant's age or whether an applicant's income
derives from any public assistance program only
for the purposes of determining a pertinent
element of creditworthiness.
" (iv) In any system of evaluating creditworthiness, a
creditor may consider the age of an elderly
applicant when such age is used to favor the
elderly applicant in extending credit.
" (3) Childbearing, child-rearing.
In evaluating
creditworthiness, a creditor shall not use
assumptions or aggregate statistics relating to the
likelihood that any group of persons will bear or rear
children or will, for that reason, receive diminished
or interrupted income in the future.
" (4) Telephone listing. A creditor shall not take into
account whether there is a telephone listing in the
name of applicant for consumer credit, but may take
into account whether there is a telephone in the
applicant's residence.
" (5) Income. A creditor shall not discount or exclude
from consideration the income of an applicant or the
spouse of an applicant because of a prohibited
basis or because the income is derived from
part-time employment or is an annuity, pension, or
other retirement benefit; a creditor may consider the
amount and probable continuance of any income in
evaluating an applicant's creditworthiness. When
an applicant relies on alimony, child support, or
separate maintenance payments in applying for
credit, the creditor shall consider such payments as
income to the extent that they are likely to be
consistently made.
" (6) Credit history. To the extent that a creditor
considers credit history in evaluating the
creditworthiness of similarly qualified applicants for
a similar type and amount of credit, in evaluating an
applicant's creditworthiness a creditor shall
consider:
" (i) The credit history, when available, of accounts
designated as accounts that the applicant and
the applicant's spouse are permitted to use or for
which they are contractually liable:
" (ii) On the applicant's request, any information the
applicant may present that tends to indicate that
the credit history being considered by the
creditor does not accurately reflect the
applicant's creditworthiness; and
" (iii) On the applicant's request, the credit history,
when available, of any account reported in the
name of the applicant's spouse or former spouse
that the applicant can demonstrate accurately
reflects the applicant's creditworthiness.
" (7) Immigration status. A creditor may consider
whether an applicant is a permanent resident of the
United States, the applicant's immigration status,
and any additional information that may be
necessary to ascertain the creditor's rights and
remedies regarding repayment.
" (c) State property laws. A creditor's consideration or
application of state laws directly or indirectly affecting
creditworthiness does not constitute unlawful
discrimination for the purposes of the act or this
regulation.
Layperson's Summary
There is a good deal of overlap between these sections:
Section 202.5, Taking Applications
Section 202.6, Evaluating Applications
Section 202.7, Extending Credit
Many of the same reasons that a creditor can not refuse to
take (accept) an application also apply to evaluating the
application, and extending credit to the applicant. For better
understanding and as a convenience to the reader, an
overview summary of these three sections follows Section
202.7.
"§ 202.7 Rules Concerning Extensions Of Credits
" (a) Individual accounts. A creditor shall not refuse to grant
an individual account to a creditworthy applicant on the
basis of sex, marital status, or any other prohibited
basis.
" (b) Designation of name. A creditor shall not refuse to
allow an applicant to open or maintain an account in a
birth-given first name and a surname that is the
applicant's birth-given surname, the spouse's surname,
or combined surname.
" (c) Action concerning existing open-end accounts.
" (1) Limitations. In the absence of the applicant's
inability or unwillingness to repay, a creditor shall
not take any of the following actions regarding an
applicant who is contractually liable on an existing
open-end account on the basis of the applicant's
reaching a certain age or retiring or on the basis of
a change in the applicant's name or marital status:
" (i) Require a reapplication, except as provided in
paragraph (c)(2) of this section;
" (ii) Change the terms of the account; or
" (iii) Terminate the account.
" (2) Requiring reapplication. A creditor may require a
reapplication for an open-end account on the basis
of a change in the marital status of an applicant
who is contractually liable if the credit granted was
based in whole or in part on income of the
applicant's spouse and if information available to
the creditor indicates that the applicant's income
may not support the amount of credit currently
available.
" (d) Signature of spouse or other person. (1) Rule for
qualified applicant.
Except as provided in this
paragraph, a creditor shall not require the signature of
an applicant's spouse or other person other than a joint
applicant, on any credit instrument if the applicant
qualified
under
the
creditor's
standards
of
creditworthiness for the amount and terms of the credit
requested.
" (2) Unsecured credit. If an applicant requests credit
and relies in part upon property that the applicant
owns jointly with another person to satisfy the
creditor's standards of creditworthiness, the creditor
may require the signature of the other person only
on the instruments necessary, or reasonably
believed by the creditor to be necessary, under the
law of the state in which the property is located, to
enable the creditor to reach the property being
relied upon in the event of the death or default of
the applicant.
" (3) Unsecured credit-community property states. If a
married applicant requests unsecured credit and
resides in a community property state, or if the
property upon which the applicant is relying is
located in such a state, a creditor may require the
signature of the spouse on any instrument
necessary, or reasonably believed by the creditor to
be necessary, under applicable state law to make
the community property available to satisfy the debt
in the event of default if:
" (i) Applicable state law denies the applicant power
to manage or control sufficient community
property to qualify for the amount of credit
requested under the creditor's standards of
creditworthiness; and
" (ii) The applicant does not have sufficient separate
property to qualify for the amount of credit
requested without regard to community property.
" (4) Secured credit. If an applicant requests secured
credit, a creditor may require the signature of the
applicant's spouse or other person on any
instrument necessary, or reasonably believed by the
creditor to be necessary, under applicable state law
to make the property being offered as security
available to satisfy the debt in the event of default,
for example, an instrument to create a valid lien,
pass clear title, waive inchoate rights or assign
earnings.
" (5) Additional parties. If, under a creditor's standards
of creditworthiness, the personal liability of an
additional party is necessary to support the
extension of the credit requested, a creditor may
request a cosigner, a guarantor, or the like. The
applicant's spouse may serve as an additional
party, but the creditor shall not require that the
spouse be the additional party.
" (6) Rights of additional parties. A creditor shall not
impose requirements upon an additional party that
the creditor is prohibited from imposing upon an
applicant under this section.
" (e) Insurance. A creditor shall not refuse to extend credit
and shall not terminate an account because credit life,
health, accident, disability, or other credit-related
insurance is not available on the basis of the
applicant's age.
Layperson's Summary
Combined for Sections 202.5 - 202.7
Age
In the past, many older persons have complained about being
denied credit just because they were over a certain age. Or
when they retired, they often found their credit suddenly cut
off or reduced. So the law is very specific about how a
person's age may be used in credit decisions.
A creditor may ask you your age, but if you're old enough to
sign a binding contract (usually 18 to 21 years old depending
on state law), a creditor may not:
1) turn you down or offer you less credit just because of your
age;
2) ignore your retirement income in rating your application;
3) close your credit account or require you to reapply for it
just because you reach a certain age or retire; or
4) deny you credit or close your account because credit life
insurance or other credit-related insurance is not available to
persons your age.
Creditors may "score" your age in a credit-scoring system,
but if you are 62 or older, you must be given at least as many
points for age as any person under 62.
Because individuals' financial situations can change at
different ages, the law allows creditors to consider certain
information related to age—such as how long until you retire
or how long your income will continue. An older applicant
might not qualify for a large loan with a 5 percent down
payment on a risky venture, but might qualify for a smaller
loan—with a bigger down payment—secured by good
collateral. Remember that while declining income may be a
handicap if you are older, you can usually offer a solid credit
history to your advantage. The creditor has to look at all the
facts and apply the usual standards of credit worthiness to
your particular situation.
Public Assistance
You may not be denied credit just because you receive Social
Security or public assistance (such as Aid to Families with
Dependent Children). But—as is the case with age—certain
information related to this source of income could clearly
affect creditworthiness. So, a creditor may consider such
things as:
1) How old your dependents are (because you may lose
benefits when they reach a certain age); or
2)Whether you will continue to meet the residency
requirements for receiving benefits.
This information helps the creditor determine the likelihood
that your public assistance income will continue.
Gender and Marital Status
Both men and women are protected from discrimination
based on gender or marital status. But many of the law's
provisions were designed to stop particular abuses that
generally made it difficult for women to get credit. For
instance, the idea that single women ignore their debts when
they marry, or that a woman's income "doesn't count"
because she'll leave work to have children, now is unlawful
in credit transactions.
Usually, creditors may not ask your gender on an application
form (one exception is on a home loan).
You do not have to use Miss, Mrs. or Ms. with your name on
a credit application. But, in some cases, a creditor may ask
whether you are married, unmarried or separated (unmarried
includes single, divorced and widowed).
Childbearing Plans
Creditors may not ask about your birth control practices or
whether you plan to have children, and they may not assume
anything about those plans.
Income and Alimony
The creditor must count all of your income, even income
from part-time employment.
Child support and alimony payments are a primary source of
income for many women. You don't have to disclose these
kinds of income, but if you do, creditors must count them.
However, a creditor may consider whether income is steady
and reliable, so be prepared to show that you can count on
uninterrupted income—particularly if the source is alimony
payment or part-time wages. The best way to do so is to
show a history with your check stubs.
Telephones
Creditors may not consider whether you have a telephone
listing in your name because this would discriminate against
many married persons who's house phone was in the name of
their spouse. (You may be asked if there's a telephone in
your home.)
Your Own Accounts
Many married women used to be turned down when they
asked for credit in their own name. Now women can choose
to establish accounts in their own first name and husband's
last name (Mary Smith), their maiden name (Mary Jones); or
a combined last name (Mary Smith-Jones).
If you're creditworthy, a creditor may not ask your spouse to
cosign your account, with certain exceptions when property
rights are involved.
Creditors may not ask for information about your spouse or
ex-spouse when you apply for your own credit based on your
own income—unless that income is alimony, child support,
or separate maintenance payments from your spouse or
former spouse.
This last rule, of course does not apply if your spouse is
going to use the account and be responsible for your debts on
the account, or if you live in a community property state.
Community property states are: Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Texas, Washington and
Wisconsin.)
Change in Marital Status
Married women have sometimes faced severe hardships
when cut off from credit after their husbands died. Single
women have had accounts closed when they married, and
married women have had accounts closed after a divorce.
The law says that creditors may not make you reapply for
credit just because you marry or become widowed or
divorced. Nor may they close your account or change the
terms of your account on these grounds. There must be a
visible indication that your credit worthiness has changed.
For example, creditors may ask you to reapply if you relied
on your ex-husband's income to get credit in the first place.
Setting up your own account will protect you by giving you
your own history of how you handle debt, to rely on if your
financial situation changed because you are widowed or
divorced. If you're getting married and plan to take your
husband's surname, write to your creditors and tell them if
you want to maintain a separate account.
Housing Loans
Although not specifically covered in this section, you should
know that the ECO Act covers your application for a
mortgage or home improvement loan. It bans discrimination
because of such characteristics as your race, color, gender, or
because of the race or origin of the people in the
neighborhood where you live or want to buy a home. Nor
may creditors use any appraisal of the value of the property
that considers the race of the people in the neighborhood.
In addition, you are entitled to receive a copy of an appraisal
report that you paid for in connection with an application for
credit, if you make a written request for the report.
"§ 202.8 Special Purpose Credit Programs
" (a) Standards for programs. Subject to the provisions of
paragraph (b) of this section, the act and this regulation
permit a creditor to extend special purpose credit to
applicants who meet eligibility requirements under the
following types of credit programs:
" (1) Any credit assistance program expressly authorized
by federal or state law for the benefit of an
economically disadvantaged class or persons;
" (2) Any credit assistance program offered by a
not-for-profit organization as defined under section
801 (c) of the Internal Revenue Code of 1954, as
amended, for the benefit of its members or for the
benefit of an economically disadvantaged class of
persons participates to meet special social needs, if
" (i) The program is established and administered
pursuant to a written plan that identifies the class
of persons that the program is designed to
benefit and sets forth the procedures and
standards for extending credit pursuant to the
program; and
" (ii) 'Me program is established and administered to
extend credit to a class of persons, who, under
the organization's customary standards of
creditworthiness, probably would not receive
such credit or would receive it on less favorable
terms than are ordinarily available to other
applicants applying to the organization for a
similar type and amount of credit.
" (b) Rules in other sections. (1) General applicability. All of
the provisions of this regulation apply to each of the
special purpose credit programs described in
paragraph (a) of this section unless modified by this
section.
" (2) Common characteristics. A program described in
paragraph (a)(2) or (a)(3) of this section qualifies as
a special purpose credit program only if it was
established and is administered so as not to
discriminate against an applicant on any prohibited
basis; however, all program participants may be
required to share one or more common
characteristics (for example, race, national origin, or
sex) so long as the program was not established
and is not administered with the purpose of evading
the requirements of the act or this regulation.
" (c) Special rule concerning requests and use of
information. If participants in a special purpose credit
program described in paragraph (a) of this section are
required to possess one or more common
characteristics (for example, race, national origin, or
sex) and if the program otherwise satisfies the
requirements of paragraph (a) of this section, a creditor
may request and consider information regarding the
common characteristics in determining the applicant's
eligibility for the program.
" (d) Special rule in the case of financial need. If financial
need is one of the criteria under a special purpose
program described in paragraph (a) of this section, the
creditor may request and consider, in determining an
applicant's eligibility for the program, information
regarding the applicant's marital status, alimony, child
support, and separate maintenance income; and the
spouse's financial resources. In addition, a creditor
may obtain the signature of an applicant's spouse or
other person on an application or credit instrument
relating to a special purpose program if the signature is
required by federal or state law.
"§ 202.9 Notifications
" (a) Notification of action taken, ECOA notice, and
statement of specific reasons (1) When notification is
required. A creditor shall notify an applicant of action
taken within:
" (i) 30 days after receiving a completed application
concerning
the
creditor's
approval
of,
counteroffer to, or adverse action on the
application;
" (ii) 30 days after taking adverse action on an
incomplete application, unless notice is provided
in accordance with paragraph (c) of this section;
" (iii) 30 days after taking adverse action on an
existing account; or
" (iv) 90 days after notifying the applicant or a
counteroffer if the applicant does not expressly
accept or use the credit offered.
" (2) Content of notification when adverse action is
taken. A notification given to an applicant when
adverse action is taken shall be in writing and shall
contain: A statement of the action taken; the name
and address of the creditor; a statement of the
provisions of section 701 (a) of the act; the name
and address of the federal agency that administers
compliance with respect to the creditor; and either:
" (i) A statement of specific reasons for the action
taken; or
" (ii) A disclosure of the applicant's right to a
statement of specific reasons with 30 days, if the
statement is requested within 60 days of the
creditor's notification.
The disclosure shall
include the name, address, and telephone
number of the person or office from which the
statement of reasons can be obtained. If the
creditor chooses to provide the reasons orally,
the creditor shall also disclose the applicant's
right to have them confirmed in writing within 30
days of receiving a written request for
confirmation from the applicant.
" (b) Form of ECOA notice and statement of specific
reasons.
" (1) ECOA notice.
To satisfy the disclosure
requirements of paragraph (a)(2) of this section
regarding section 701 (a) of the act, the creditor
shall provide a notice that is substantially similar to
the following: The Federal Equal Credit Opportunity
Act prohibits creditors from discriminating against
credit applicants on the basis of race, color, religion,
national origin, sex, marital status, age (provided
the applicant has the capacity to enter into a binding
contract); because all or part of the applicant's
income derives from public assistance programs; or
because the applicant has in good faith exercised
any right under the Consumer Credit Protection Act.
The federal agency then administers compliance
with this law concerning this creditor is (name and
address as specified by the appropriate agency
listed in Appendix A of this regulation).
" (2) Statement of specific reasons. The statement of
reasons for adverse action required by paragraph
(a)(2)(i) of this section must be specific and indicate
the principal reason(s) for the adverse action.
Statements that the adverse action was based on
the creditor's internal standards policies or that the
applicant failed to achieve the qualifying score on
the creditor's credit scoring system are insufficient.
" (c) Incomplete applications. (1) Notice alternatives. Within
30 days after receiving an application that is incomplete
regarding matters that an applicant can complete, the
creditor shall notify the applicant either:
" (i) Of action taken, in accordance with paragraph
(a) of this section; or
" (ii) Of the incompleteness, in accordance with
paragraph (c)(2) of this section.
" (2) Notice of incompleteness. If additional information
is needed from an applicant, the creditor shall send
a written notice to the applicant specifying the
information needed, designating a reasonable
period of time for the applicant to provide the
information, and informing the applicant that failure
to provide the information will result in no further
consideration being given to the application. The
creditor shall have no further obligation under this
section if the applicant fails to respond within the
designated time period. If the applicant supplies
the requested information within the designated
time period, the creditor shall take action on the
application and notify the applicant in accordance
with paragraph (a) of this section.
" (3) Oral requests for information. At its option, a
creditor may inform the applicant orally of the need
for additional information; but if the application
remains incomplete the creditor shall send a notice
in accordance with paragraph (c)(1) of this section.
" (4) Oral notifications by small-volume creditors. The
requirements of this section (including statements
of specific reasons) are satisfied by oral
notifications in the case of any creditor that did not
receive more than 150 applications during the
preceding calendar year.
" (e) Withdrawal of approved applications. When an
applicant submits an application and the parties
contemplate that the applicant will inquire about its
status, if the creditor approves the application and
the applicant has not inquired within 30 days after
applying, the creditor may treat the application as
withdrawn and need not comply with paragraph
(a)(1) of this section.
" (f) Multiple applicants. When an application involves
more than one applicant, notification need only by
given to one of them, but must be given to the
primary applicant where one is readily apparent.
" (g) Applications submitted through a third party. When
an application is made on behalf of an applicant to
more than one creditor and the applicant expressly
accepts or uses credit offered by one of the
creditors, notification of action taken by any of the
other creditors is not required. If no credit is offered
or if the applicant does not expressly accept or use
any credit offered, each creditor taking adverse
action must comply with this section, directly or
through a third party. A notice given by a third party
shall disclose the identity of each creditor on whose
behalf the notice is given.
"§ 202.10 Furnishing Of Credit Information
" (a) Designation of accounts. A creditor that furnished
credit information shall designate:
" (1) Any new account to reflect the participation of both
spouses if the applicant's spouse is permitted to
use or is contractually liable on the account (other
than as a guarantor, surety, endorser, or similar
party);
" (2) Any existing account to reflect such participation,
within 90 days after receiving a written request to do
so from one of the spouses.
" (b) Routine reports to consumer reporting agency. If a
creditor furnishes credit information to a consumer
reporting agency concerning an account designated to
reflect the participation of both spouses, the creditor
shall furnish the information in a manner that will
enable the agency to provide access to the information
in the name of each spouse.
" (c) Reporting in response to inquiry. If a creditor furnishes
credit information in response to an inquiry concerning
an account designated to reflect the participation of
both spouses, the creditor shall furnish the information
in the name of the spouse about whom the information
is requested.
"§ 202.11 Relations To State Law
" (a) Inconsistent state laws. Except as otherwise provided
in this section, this regulation alters, affects, or
preempts only those state laws that are inconsistent
with the act and this regulation and then only to the
extent of the inconsistency.
A state law is not
inconsistent if it is more protective of an applicant.
" (b) Preempted provisions of state law. (1) A state law is
deemed to be inconsistent with the requirements of the
act and this regulation and less protective of an
applicant within the meaning of section 706(f) of the act
to the extent that the law:
" (i) Requires or permits a practice or act prohibited
by the act or this regulation;
" (ii) Prohibits the individual extension of consumer
credit to both parties to a marriage if each
spouse individually and voluntarily applies for
such credit;
" (iii) Prohibits inquiries or collection of data required
to comply with the act or this regulation;
" (iv) Prohibits asking or considering age in an
empirically
derived,
demonstrably
and
statistically sound credit scoring system to
determine
a
pertinent
element
of
creditworthiness, or to favor an elderly applicant;
or
" (v) Prohibits inquiries necessary to establish or
administer as special purpose credit program as
defined by 202.8.
" (2) A creditor, state, or other interested party may
request the Board to determine whether a state law
is inconsistent with the requirements of the act and
this regulation.
" (c) Laws on finance charges, loan ceilings. If married
applicants voluntarily apply for and obtain individual
accounts with the same creditor, the accounts shall not
be aggregated or otherwise combined for purposes of
determining permissible finance charges or loan
ceilings under any federal or state law. Permissible
loan ceiling laws shall be construed to permit each
spouse to become individually liable up to the amount
of the loan ceilings, less the amount for which the
applicant is jointly liable.
" (d) State and federal laws not affected. 'This section does
not alter or annul any provision of state property laws,
laws relating to the disposition of decedents' estates, or
federal or state banking regulation directed only toward
insuring the solvency of financial institutions.
" (e) Exemption for state-regulated transactions.
" (1) Applications. A state may apply to the Board for an
exemption from the requirements of the act and this
regulation for any class of credit transactions within
the state. The Board will grant such an exemption if
the Board determines that:
" (i) The class of credit transactions is subject to state
law requirements substantially similar to the act
and this regulation or that applicants are afforded
greater protection under state law; and
" (ii) There is adequate provision for state
enforcement.
" (2) Liability and enforcement. (i) No exemption will
extend to the civil liability provisions of section 706
or the administrative enforcement provisions of
section 704 of the act.
" (ii) After an exemption has been granted, the
requirements of the applicable state law (except
for additional requirements not imposed by
federal law) will constitute the requirements of
the act and this regulation.
"§ 202.12 Record Retention
" (a) Retention of prohibited information. A creditor may
retain in its files information that is prohibited by the act
or this regulation in evaluating applications, without
violating the act or this regulation, if the information is
obtained:
" (1) From any source prior to March 23, 1977;
" (2) From consumer reporting agencies, an applicant,
or others without the specific request of the creditor;
or
" (3) As required to monitor compliance with the act and
this regulation or other federal or state statutes or
regulations.
" (b) Preservation of records. (1) Applications. For 25
months after the date that a creditor notifies an
applicant of action taken on an application or
incompleteness, the creditor shall retain in original form
or a copy thereof " (i) any application that it receives, any information
required
to
be
obtained
concerning
characteristics of the applicant to monitor
compliance with the act and this regulation or
other similar law, and any other written or
recorded information used in evaluating the
application and not returned to the applicant at
the applicant's request;
" (ii) A copy of the following documents if furnished to
the applicant in written form (or, if furnished
orally, any notation or memorandum made by the
creditor):
" (A) The notification of action taken; and
" (B) The statement of specific reasons for adverse
action; and
" (iii) Any written statement submitted by the
applicants alleging a violation of the act or this
regulation.
" (2) Existing accounts. For 25 months after the date
that a creditor notifies an applicant of adverse
action regarding an existing account, the creditor
shall retain as to that account, in original form or a
copy thereof" (i) Any written or recorded information concerning
the adverse action: and
" (ii) Any written statement submitted by the applicant
alleging a violation of the act or this regulation.
" (3) Other applications. For 25 months after the date
that a creditor receives an application for which the
creditor is not required to comply with the
notification requirements of 202.9, the creditor shall
retain all written or recorded information in its
possession concerning the applicant, including any
notation of action taken.
" (4) Enforcement of proceedings and investigations. A
creditor shall retain the information specified in this
section beyond 25 months if it has actual notice that
it is under investigation or is subject to an
enforcement proceeding for an alleged violation of
the act of this violation of the act or this regulation
by the Attorney General of the United States or by
an enforcement agency charged with monitoring
that creditor's compliance with the act and this
regulation, or if it has been served with notice of an
action filed pursuant to section 706 of the act and
202.14 of this regulation. The creditor shall retain
the information until final disposition of the matter,
unless an earlier time is allowed by order of the
agency or court.
"§ 202.13 Information For Monitoring Purposes
" (a) Information to be requested. A creditor that receives an
application for credit primarily for the purchase or
refinancing of a dwelling occupied by the applicant as a
principal residence, where the extension of credit will
be secured by the dwelling, shall request as part of the
application the following information regarding the
applicant(s):
" (1) Race or national origin, using the categories
American Indian or Alaskan Native; Asian or Pacific
Islander; Black; White; Hispanic; Other (specify);
" (2) Sex;
" (3) Marital status, using the categories married,
unmarried, and separated; and
" (4) Age.
"Dwelling" means a residential structure that
contains one to four units, whether or not that
structure is attached to real property. The term
includes, but is not limited to, an individual
condominium or cooperative unit, and a mobile or
other manufactured home.
" (b) Obtaining of information. Questions regarding race or
national origin, sex, martial status, and age may be
listed, at the creditor's option, on the application form or
on a separate form that refers to the application. The
applicant(s) shall be asked but not required to supply
the requested information. If the applicant(s) chooses
not to provide the information or any part of it, that fact
shall be noted on the form. The creditor shall then also
note on the form, to the extent possible, the race or
national origin and sex of the applicant(s) on the basis
of visual observation or surname.
" (c) Disclosure to applicant(s). The creditor shall inform the
applicant(s) that the information regarding race or
national origin, sex, marital status, and age is being
requested by the federal government for the purpose of
monitoring compliance with federal statutes that
prohibit creditors from discriminating against applicants
on those bases. 'The creditor shall also inform the
applicant(s) that if the applicant(s) chooses not to
provide the information, the creditor is required to note
the race or national origin and sex on the basis of
visual observation or surname.
" (d) Substitutive-monitoring program.
A monitoring
program required by an agency charged with
administrative enforcement under section 704 of the
act may be substituted for the requirements contained
in paragraphs (a), (b), and (c).
"§ 202.14 Enforcement, Penalties, And Liabilities
" (a) Administrative enforcement (1) As set forth more fully in
section 704 of the act, administrative enforcement of
the act and this regulation regarding certain creditors is
assigned to the Comptroller the Currency, Board of
Governors of the Federal Reserve System, Board of
Directors of the Federal Deposit Insurance Corporation,
Federal Home Loan Bank Board (acting directly or
through the Federal Savings and Loan Insurance
Corporation), National Credit Union Administration,
Interstate Commerce Commission, Secretary of
Agriculture, Farm Credit Administration, Securities and
Exchange
Commission,
Small
Business
Administration, and Secretary of Transportation.
" (2) Except to the extent that administrative
enforcement is specifically assigned to other
authorities, compliance with the requirements
imposed under the act and this regulation is
enforced by the Federal Trade Commission.
" (b) Penalties and Liabilities. (1) Sections 706(a) and (b)
and 702(g) of the act provide that any creditor that fails
to comply with a requirement imposed by the act or this
regulation is subject to civil liability for actual and
punitive damages in individual or class actions.
Pursuant to sections 704(b), (c), and (d) and 702(g) of
the act, violations of the act or regulations also
constitute violations of other federal laws. Liability for
punitive damages is restricted to nongovernmental
entities and is limited to $10,000 in individual actions
and the lesser of $50,000 or I percent of the creditor's
net worth in class actions, section 706(c) provides for
equitable and declaratory relief and section 706(d)
authorizes the awarding of costs and reasonable
attorney's fees to an aggrieved applicant in a
successful action. (2) As provided in section 706(f), a
civil action under the act or this regulation may be
brought in the appropriate United States district court
without regard to the amount in controversy or in any
other court of competent jurisdiction within two years
after the date of the occurrence of the violation, or
within one year after the commencement of an
administrative enforcement proceeding or of a civil
action brought by the Attorney General of the United
States within two years after the alleged violation.
" (3) Sections 706(g) and (h) provide that, if an agency
responsible for administrative enforcement is
unable to obtain compliance with the act or this
regulation, it may refer the matter to the Attorney
General of the United States. On referral, or
whenever the Attorney General has reason to
believe that one or more creditors are engaged in a
pattern or practice in violation of the act or this
regulation, the Attorney General may bring a civil
action.
" (c) Failure of compliance. A creditor's failure to comply
with 202.6(b)(6), 202.9, 202.10, 202.12 or 202.13 is not
a violation if it results from an inadvertent error. On
discovering an error under 202.9 and 202. 10, the
creditor shall correct it as soon as possible. If a
creditor
inadvertently
obtains
the
monitoring
information regarding the race or national origin and
sex of the applicant in a dwelling-related transaction not
covered by 202.13, the creditor may act on and retain
the application without violating the regulation.
CHAPTER 6:
THE FAIR CREDIT
REPORTING ACT
"FAIR CREDIT REPORTING ACT."
As amended by Public Law #95-598
Title VI of The Consumer Protection Act (Public Law 90-321) was
amended by adding at the end thereof the following new Title VI
covering provisions relating to credit reporting agencies.
TITLE VI - CONSUMER CREDIT REPORTING
"Sec.
"601.
"602.
"603.
"604.
"605.
"606.
"607.
"608.
"609.
"610.
"611.
"612.
"613.
Short title.
Finding and purpose.
Definitions and rules of construction.
Permissible purposes of reports.
Obsolete information.
Disclosure of investigative consumer reports.
Compliance procedures.
Disclosures to governmental agencies.
Disclosure to consumers.
Conditions of disclosure to consumers.
Procedure in case of disputed accuracy.
Charges for certain disclosures.
Public record information for employment purposes.
"614.
"615.
"616.
"617.
"618.
"619.
"620.
"621.
"622.
Restrictions on investigative consumer reports.
Requirements on users of consumer reports.
Civil liability for willful noncompliance.
Civil liability for negligent noncompliance.
Jurisdiction of courts: limitation of actions.
Obtaining information under false pretenses.
Unauthorized disclosures by officers or employees.
Administrative enforcement.
Relation to State laws.
"§ 601. Short Title
"This title may be cited as the "Fair Credit Reporting Act."
"§ 602. Finding And Purpose
" (a) The Congress make the following findings:
" (1) The banking system is dependent upon fair and
accurate credit reporting. Inaccurate credit reports
directly impair the efficiency of the banking system,
and unfair credit reporting methods undermine the
public confidence which is essential to the
continued functioning of the banking system.
" (2) An elaborate mechanism has been developed for
the investigating evaluation the credit worthiness,
credit standing, credit capacity, character, and
general reputation of consumers.
" (3) Consumer reporting agencies have assumed a
vital role in assembling and evaluating consumer
credit and other information on consumers.
" (4) There is a need to insure that consumer reporting
agencies exercise their grave responsibilities with
fairness, impartiality, and a respect for the
consumer's right to privacy.
" (b) It is the purpose of this title to require that consumer
reporting agencies adopt reasonable procedure for
meeting the needs of commerce for consumer credit,
personnel, insurance, and other information in a
manner which is fair and equitable to the consumer,
information in accordance with the requirements of this
title.
"§ 603. Definitions And Rules Of Construction
" (a) Definitions and rule of construction set forth in this
section are applicable for the purpose of this title.
" (b) The term 'person' means any individual, partnership,
corporation, trust estate, cooperative, association,
government or governmental subdivision or agency, or
other entity.
" (c) The term 'consumer' means an individual.
" (d) The term 'consumer report' means any written, oral or
other communication of any information by a consumer
reporting agency bearing on a consumer's credit
worthiness, credit standing, credit capacity, character,
general reputation, personal characteristics, or mode of
living which is used or expected to be used or collected
in whole or in part for the purpose of serving as a factor
in establishing the consumer's eligibility for (1) credit or
insurance to be used primarily for personal, family, or
household purposes, or (2) employment purposes, or
(3) other purposes authorized under section 604. The
term does not include (A) any report containing
information solely as to transactions or experiences
between the consumer and the person making the
report; (B) any authorization or approval of a specific
extension of credit directly or indirectly by the issuer of
a credit card or similar device; or (C) any report in
which a person who has been requested by a third
party to make a specific extension of credit directly or
indirectly to a consumer conveys his decision with
respect to such request, if the third party advises the
consumer of the name and address of the person to
whom the request was mad and such person makes
the disclosures to the consumer required under section
615.
" (e) The term 'investigative consumer report' means a
consumer report or portion thereof in which information
on a consumer's character, general reputation,
personal characteristics, or mode of living is obtained
through personal interviews with neighbors, friends or
associates of the consumer reported on or with others
" (f)
" (g)
" (h)
" (i)
with whom he is acquainted or may have knowledge
concerning any such items of information. However,
such information shall not include specific factual
information on a consumer's credit record obtained
directly from a creditor of the consumer or from a
consumer reporting agency when such information was
obtained directly from a creditor of the consumer or
from the consumer.
The term 'consumer reporting agency' means any
person which, for monetary fees, dues, or on a
cooperative nonprofit basis, regularly engages in whole
or in part in the practice of assembling or evaluating
consumer credit information or other information on
consumers for the purpose of furnishing consumer
reports to third parties, and which uses any means or
facility of interstate commerce for the purpose of
preparing or furnishing consumer reports.
The term 'file', when used in connection with
information on any consumer, means all of the
information on that consumer recorded and retained by
a consumer reporting agency regardless of how the
information is stored.
The term 'employment purposes' when used in
connection with a consumer report means a report
used for the purpose of evaluating a consumer for
employment, promotion, reassignment or retention as
an employee.
The term 'medical information' means information or
records obtained, with the consent of the individual to
whom it relates, from licensed physicians or medical
practitioners, hospitals, clinics, or other medical
medically related facilities.
"§ 604. Permissible Purposes Of Reports
"A consumer reporting agency may furnish a consumer
report under the following circumstances and no other:
" (1) In response to the order of a court having jurisdiction to
issue such an order.
" (2)
In accordance with the written instructions of the
consumer to whom it relates.
" (3) To a person which it has reason to believe
" (A) intends to use the information in connection with a
credit transaction involving the consumer on whom
the information is to be furnished and involving the
tension of credit to, or review or collection of an
account of, the consumer; or
" (B) intends to use the information for employment
purposes; or
" (C) intends to use the information in connection with
the underwriting of insurance involving the
consumer; or
" (D) intends to use the information in connection with a
determination of the consumer's eligibility for a
license or other benefit granted by a governmental
instrumentality required by law to consider an
applicant's financial responsibility or status; or
" (E) otherwise has a legitimate business need for the
information in connection with a business
transaction involving the consumer.
Layperson's Summary
Section 604 - Permissible Purposes of Reports
Your credit report may be requested by those who have a
legitimate business need for the information. This would
include for purposes such as granting credit, providing
insurance and employment. You have the right to have your
file withheld from those whom you have not given a real
business need for requesting it.
"§ 605. Obsolete Information
" (a)
Except as authorized under subsection (b), no
consumer reporting agency may make any consumer
report containing any of the following items of
information:
" (1) Cases under Title 11 of the United States Code or
under the Bankruptcy Act that, from the date of
entry of the order for relief or the date of
adjudication, as the cause may me, antedate the
report by more than 10 years.
" (2) Suits and judgments which, from date of entry,
antedate the report by more than seven years or
until the governing statute of limitations has expired,
whichever is the longer period.
" (3) Paid tax liens which, from date of payment,
antedated the report by more than seven years.
" (4) Accounts placed for collection or charged to profit
and loss which antedate the report by more than
seven years.
" (5) Records of arrest, indictment, or conviction of crime
which, from date of disposition, release, or parole,
antedate the report by more than seven years.
" (6) Any other adverse item of information which
antedates the report by more than seven years.
" (b) The provisions of subsection (a) are not applicable in
the case of any consumer credit report to be used in
connection with—
" (1) a credit transaction involving, or which may
reasonably be expected to involve, a principal
amount of $50,000 or more;
" (2) the underwriting of life insurance involving, or
which may reasonably be expected to involve, a
face amount of $50,000 or more; or
" (3) the employment of any individual at an annual
salary which equals, or may reasonably
be
expected to equal $20,000, or more.
Public Law 99-498, Section 405(a)
Notwithstanding paragraphs (4) and (6) of subsection (a)
of section 605 of the Fair Credit Reporting Act (15 U.S.C.
1681c(a)(4), (a)(6)), a consumer reporting agency may make a
report containing information received from the Secretary
regarding the status of a borrower's account on a loan made
under this part until the later of—
" (A) seven years from the date on which the Secretary
accepted an assignment or referral of a loan, or
" (B) seven years from the date the Secretary first reported
the account to a consumer reporting agency, if that
account had not been previously reported by any other
holder of the note.
Layperson's Summary
Section 605 - Obsolete Information
Negative information must be removed from your file after 7
years from the time it was reported. The major exception is
bankruptcy which will remain for 10 years.
"§ 606. Disclosure Of Investigative Consumer Reports
" (a) A person may not procure or cause to be prepared an
investigative consumer report on any consumer
unless—
" (1) it is clearly and accurately disclosed to the
consumer that an investigative consumer report
including information as to his character, general
reputation, personal characteristics, and mode of
living, whichever are applicable, may be made, and
such disclosure (A) is made in a writing mailed, or
otherwise delivered, to the consumer, not later than
three days after the date on which the report was
first requested, and (B) includes a statement
informing the consumer of his right to request the
additional disclosures provided for under subsection
(b) of this section; or
" (2) the report is to be used for employment purposes
for which the consumer has not specifically applied.
" (b) Any person who procures or causes to be prepared an
investigative consumer report on any consumer shall,
upon written request made by the consumer within a
reasonable period of time after the receipt by him of the
disclosure required by subsection (a)(1), shall make a
complete and accurate disclosure of the nature and
scope of the investigation requested. This disclosure
shall be made in a writing mailed, or otherwise
delivered, to the consumer not later than five days after
the date on which the request for such disclosure was
received from the consumer or such report was first
requested, whichever is later.
" (c) No person may be held liable for nay violation of
subsection (a) or (b) of this section if he shows by
preponderance of the evidence that at the time of the
violation he maintained reasonable procedures to
assure compliance with subsection (a) or (b).
Layperson's Summary
Section 606 - Disclosure of Investigative Consumer Reports
A company must send you notice that they are conducting an
investigative consumer report (not a consumer report)
within 3 days from the time they request such a report. You
have the right to then request from that company more
information as to the nature and scope of the investigation.
"§ 607. Compliance Procedures
" (a)
Every consumer reporting agency shall maintain
reasonable procedures designed to avoid violations of
section 605 and to limit the furnishing of consumer
reports to the purposes listed under section 604.
These procedures shall require that prospective users
of the information identify themselves, certify the
purposes for which the information is sought, and
certify that the information will be for no other purpose.
Every consumer reporting agency shall make a
reasonable effort to verify the identity of a new
prospective user and the uses certified by such
prospective user prior to furnishing such user a
consumer report. No consumer reporting agency may
furnish a consumer report to any person if it has
reasonable grounds for believing that the consumer
report will no be used for a purpose listed in section
604.
" (b) Whenever a consumer reporting agency prepares a
consumer report it shall follow reasonable procedures
to assure maximum possible accuracy of the
information concerning the individual about whom the
report relates.
"§ 608. Disclosure To Governmental Agencies
"Notwithstanding the provisions of section 604, a consumer
reporting agency may furnish identifying information respecting
any consumer, limited to his name, address, former
addresses, places of employment, or former places of
employment, to a governmental agency.
"§ 609. Disclosure To Consumers
" (a) Every consumer reporting agency shall, upon request
and proper identification of any consumer, clearly and
accurately disclose to the consumer:
" (1) The nature and substance of all information
(except medical information) in its files on the
consumer at the time of the request.
" (2) The sources of the information; except that the
sources of information acquired solely for use in
preparing an investigative consumer report and
actually used for no other purpose need not be
disclosed: Provided, that in the event an action is
brought under this title, such sources shall be
available to the plaintiff under appropriate discovery
procedures in the court in which the action is
brought.
" (3) The recipients of any consumer report on the
consumer which it has furnished
" (A) for employment purposes within the two-year
period preceding the request, and
" (B) for any other purpose within the six-month
period preceding the request.
" (b)
The requirements of subsection (a) respecting the
disclosure of sources of information and the recipients
of consumer reports do not apply to information
received or consumer reports furnished prior to the
effective date of this title except to the extent that the
matter involved is contained in the files of the
consumer reporting agency on that date.
Layperson's Summary
Section 609 - Disclosure to Consumers
Upon your request, a credit bureau must reveal the nature,
substance and sources (except investigative type sources) of
the information (except medical) collected about you.
"§ 610. Conditions Of Disclosure To Consumers
" (a)
A consumer reporting agency shall make the
disclosure required under section 609 during normal
business hours and on reasonable notice.
" (b) The disclosures required under section 609 shall be
made to the consumer—
" (1) in person if he appears in person and furnishes
proper identification; or
" (2) by telephone if he has made a written request, with
proper identification, for telephone disclosure and
the toll charge, if nay, for the telephone call is
prepaid by or charged directly to the consumer.
" (c) Any consumer reporting agency shall provide trained
personnel to explain to the consumer any information
furnished to him pursuant to section 609.
" (d) The consumer shall be permitted to be accompanied
by one other person of his choosing, who shall furnish
reasonable identification.
A consumer reporting
agency may require the consumer to furnish a written
statement granting permission to the consumer
reporting agency to discuss the consumer's file in such
person's presence.
" (e)
Except as provided in sections 616 and 617, no
consumer may bring any action or proceeding in the
nature of defamation, invasion of privacy, or negligence
with respect to the reporting of information against any
consumer reporting agency, any user of information, or
any person who furnishes information to a consumer
reporting agency, based on information disclosed
pursuant to sections 609,610 or 615, except as to false
information furnished with malice or willful intent to
injure such consumer.
Layperson's Summary
Section 610 - Conditions of Disclosure to Consumers
You have the right to take anyone (attorney, accountant, etc.)
with you to the credit bureau when you go to view your file.
"§ 611. Procedure In Case Of Disputed Accuracy
" (a)
If the completeness or accuracy of nay item of
information contained in his file is disputed by a
consumer, and such dispute is directly conveyed to the
consumer reporting agency by the consumer, the
consumer reporting agency shall within a reasonable
period of time reinvestigate and record the current
status of that information unless it has reasonable
grounds to believe that the dispute by the consumer is
frivolous or irrelevant. If after such reinvestigation such
information is found to be inaccurate or can non longer
be verified, the consumer reporting agency shall
promptly delete such information. The presence of
contradictory information in the consumer's file does
not in and of itself constitute reasonable grounds for
believing the dispute is frivolous or irrelevant.
" (b) If the reinvestigation does not resolve the dispute, the
consumer may file a brief statement setting forth the
nature of the dispute. The consumer reporting agency
may limit such statements to not more than one
hundred words if it provides the consumer with
assistance in writing a clear summary of the dispute.
" (c) Whenever a statement of a dispute is filed, unless
there is reasonable grounds to believe that it is
frivolous or irrelevant, the consumer reporting agency
shall, in any subsequent consumer report containing
the information in question, clearly note that it is
disputed by the consumer and provide either the
consumer's statement or a clear and accurate
codification or summary thereof.
" (d) Following any deletion of information which is found to
be inaccurate or whose accuracy can no longer be
verified or any notation as to disputed information, the
consumer reporting agency shall, at request of the
consumer, furnish notification that the item has been
deleted or the statement, codification or summary
pursuant to subsection (b) or (c) to any person
specifically designated by the consumer who has within
two years prior thereto received a consumer report for
employment purposes, or within six months prior
thereto received a consumer report for any other
purpose, which contained the deleted or disputed
information. The consumer reporting agency shall
clearly and conspicuously disclose to the consumer his
rights to make such a request. Such disclosure shall
be made at or prior to the time the information is
deleted or the consumer's statement regarding the
disputed information is received.
Layperson's Summary
Section 611 - Procedure In Case of Disputed Accuracy
You may dispute anything in your file that is inaccurate. The
bureau has reasonable time (30 days) to verify the
information with the original source, or it must be removed.
If the information is confirmed by the source that reported it,
but you still believe it to be inaccurate, you may have a
statement of up to 100 words added to your file explaining
the circumstances surrounding that item. You can then
request that your statement be sent to any company that
received your file without your side of the story.
If the information is found to be incorrect and thus removed,
at your request the bureau must make notification of the
correction to any company that received the wrong
information. There can be no charge to you for them doing
this.
NOTE: Before initiating any of the steps above, please
read HUG IR#113, Fresh Start: The Authoritative Guide To
Repairing Your Credit. These things, along with many
others that you will discover, need to be done in a certain
way and in particular order. If you do it wrong the first
time, it is very hard to go back and undo. So study well
before you act.
"§ 612. Charges For Certain Disclosures
"A consumer reporting agency shall make all disclosure
pursuant to section 609 and furnish all consumer reports
pursuant to section 611(d) without charge to the consumer if,
within thirty days after receipt by such consumer of a
notification pursuant to section 615 or notification from a debt
collection agency affiliated with such consumer reporting
agency stating that the consumer's credit rating may be or has
been adversely affected, the consumer makes a request
under section 609 or 611(d). Otherwise, the consumer
reporting agency may impose a reasonable charge on the
consumer for making disclosure to such consumer pursuant to
section 609, the charge for which shall be indicated to the
consumer prior to making disclosure; and for furnishing
notification, statements, summaries, or codification to person
designated by the consumer prior to furnishing such
information and shall not exceed the charge that the consumer
reporting agency would imposed on each designated recipient
for a consumer report except that no charge may be made for
notifying such persons of the deletion of information which is
found to be inaccurate or which can no longer be verified.
Layperson's Summary
Section 612 - Charges For Certain Disclosures
You may request free of charge all information to which you
are entitled if the request is made within 30 days after receipt
of a notification that you have been denied credit, insurance
or employment because of information contained in a
consumer report. Otherwise, the bureau is permitted to
charge a reasonable fee.
"§ 613. Public Record Information For Employment
Purposes
"A consumer reporting agency which furnishes a consumer
report for employment purposes and which for that purpose
compiles and reports items of information on consumers
which are matters of public record and are likely to have an
adverse effect upon a consumer's ability to obtain employment
shall—
" (1) at the time such public record information is reported
to the user of such consumer report, notify the
consumer of the fact that public record information is
being reported by the consumer reporting agency,
together with the name and address of the person to
whom such information is being reported; or
" (2) maintain strict procedures designed to insure that
whenever public information which is likely to have an
adverse effect on a consumer's ability to obtain
employment is reported it is complete and up to date.
For purposes of this paragraph, items of public record
relating to arrest, indictments, conviction, suit, tax liens,
and outstanding judgments shall be considered up to
date if the current public record status of the item at the
time of the report is reported.
"§ 614. Restrictions On Investigative Reports
"Whenever a consumer reporting agency prepares an
investigative consumer report, no adverse information in the
consumer report (other than information which is a matter of
public record) may be include in a subsequent consumer
report unless such adverse information has been verified in
the process of making such subsequent consumer report, or
the adverse information was received within the three-month
period preceding the date the subsequent report is furnished.
"§ 615. Requirements On Users Of Consumer Reports
" (a) Whenever credit or insurance for personal, family, or
household purposes, or employment involving a
consumer is denied or the charge for such credit or
insurance is increased either wholly or partly because
of information contained in a consumer report from a
consumer reporting agency, the user of the consumer
report shall so advise the consumer against whom
such adverse action has been taken and supply the
name and address of the consumer reporting agency
making the report.
" (b) Whenever credit for personal, family, or household
purposes involving a consumer is denied or the charge
for such credit is increased either wholly or partly
because of information obtained form a person other
than a consumer reporting agency bearing upon the
consumer's credit worthiness, credit standing, credit
capacity, character, general reputation, personal
characteristics, or mode of living, the user of such
information shall, within a reasonable period of time,
upon the consumer's written request for the reasons for
such adverse action received within sixty days after
learning of such adverse action, disclose the nature of
the information to the consumer. The use of such
information shall clearly and accurately disclose to the
consumer his right to make such written request at the
time such adverse action is communicated to the
consumer.
" (c) No person shall be held liable for any violation of this
section if he shows by a preponderance of the
evidence that tat the time of the alleged violation he
maintained reasonable procedures to assure
compliance with the provisions of subsections (a) and
(b).
Layperson's Summary
Section 615 - Requirements On Users of Consumer Reports
A company who denies you credit, insurance, employment,
or raises the cost of your insurance or credit due to
information obtained from a credit bureau must inform you
which bureau the negative information came from.
"§ 616. Civil Liability For Willful Noncompliance
"Any consumer reporting agency or user of information
which willfully fails to comply with any requirement imposed
under this title with respect to any consumer is liable to that
consumer in an amount equal to the sum of—
" (1) any actual damages sustained by the consumer as a
result of the failure;
" (2) such amount of punitive damages as the court may
allow; and
" (3) in the case of any successful action to enforce any
liability under this section, the costs of the action
together with reasonable attorney's fees as determined
by the court.
"§ 617. Civil Liability For Negligent Noncompliance
"Any consumer reporting agency or user of information
which is negligent in failing to comply with any requirement
imposed under this title with respect to any consumer is liable
to that consumer in an amount equal to the sum of—
" (1) any actual damages sustained by the consumer as a
result of the failure;
" (2) in the case of any successful action to enforce any
liability under this section, the costs of the action
together with reasonable attorney's fees as determined
by the court.
Layperson's Summary
Section 617 - Civil Liability For Negligent Noncompliance
You have the right to sue a bureau for damages if the agency
willfully or negligently violates the law; and, if you are
successful, to collect attorney's fees and court costs.
"§ 618. Jurisdiction Of Courts; Limitation Of Actions
"An action to enforce any liability created under this title may
be brought in any appropriate United Sates district court
without regard to the amount in controversy, or in any other
court of competent jurisdiction, within two years from the date
on which the liability arises, except that where a defendant has
materially and willfully misrepresented any information
required under this title to be disclosed to an individual and the
information so misrepresented is material to the establishment
of the defendant's liability to that individual under this title, the
action may be brought at any time within two years after
discovery by the individual of the misrepresentation.
"§ 619. Obtaining Information Under False Pretenses
"Any person who knowingly and willfully obtains information
on a consumer from a consumer reporting agency under false
pretenses shall be fined not more than $5,000 or imprisoned
not more than one year, or both.
"§ 620. Unauthorized Disclosure By Officers Or
Employees
"Any officer or employee of a consumer reporting agency
who knowingly and willfully provides information concerning an
individual from the agency's files to a person not authorized to
receive that information shall be fined not more than $5,000 or
imprisoned not more than one year, or both.
"§ 621. Administrative Enforcement
" (a) Compliance with the requirements imposed under this
title shall be enforced under the Federal Trade
Commission Act by the Federal Trade Commission
with respect to consumer reporting agencies and all
other persons subject thereto, except to the extent that
enforcement of the requirements imposed under this
title is specifically committed to some other government
agency under subsection (b) hereof. For the purpose
of the exercise by the Federal Trade Commission of its
functions and powers under the Federal Trade
Commission Act, a violation of any requirement or
prohibition imposed under this title shall constitute an
unfair or deceptive act or practice in commerce in
violation of section 5(a) of the Federal Trade
Commission Act and shall be subject to enforcement
by the Federal Trade Commission under section 5(b)
thereof with respect to any consumer reporting agency
or person subject to enforcement by the Federal Trade
Commission pursuant to this subsection, irrespective of
whether that person is engaged in commerce or meets
any other jurisdictional tests in the Federal Trade
Commission Act. The Federal Trade Commission shall
have such procedural, investigative, and enforcement
powers, including the power to issue procedural rules in
enforcing compliance with the requirements imposed
under this title and to require the filing of reports, the
production of documents, and the appearance of
witnesses as though the applicable terms and
conditions of the Federal Trade Commission Act are
part of this title. Any person violating any of the
provisions of this title shall be subject to the penalties
and entitled to the privileges and immunities provided
in the Federal Trade Commission Act as though the
applicable terms and provisions thereof were part of
this title.
" (b) Compliance with the requirements imposed under this
tittle with respect to consumer reporting agencies and
persons who use consumer reports from such agencies
shall be enforced under—
" (1) section 8 of the Federal Deposit Insurance Act, in
the case of :
" (A) national banks, by the Comptroller of the
Currency;
" (B) member banks of the Federal Reserve System
(other than national banks),
by the Federal
Reserve Board; and
" (C)
banks insured by the Federal Deposit
Insurance Corporation (other than
members
of the Federal Reserve System), by the Board of
Directors of the Federal Deposit Insurance
Corporation.
" (2) section 5(d) of the Home Owners Loan Act of
1933, section 407 of the National Housing Act, and
sections 6(i) and 17 of the Federal Home Loan Act,
by the Federal Home Loan Bank Board (acting
directly or through the Federal Savings and Loan
Insurance Corporation), in the case of any
institution subject to any of those provisions;
" (3) the Federal Credit Union Act, by the Administrator
of the National Credit Union Administration with
respect to any Federal credit union;
" (4) the Acts to regulated commerce, by the Interstate
Commerce Commission with respect to any
common carrier subject to those Acts;
" (5) the federal Aviation Act of 1958, by the Civil
Aeronautics Board with respect to any air carrier or
foreign air carrier subject to that Act; and
" (6) The Packers and Stockyards Act, 1921 (except as
provided in section 406 of that Act), by the
Secretary of Agriculture with respect to any
activities subject to that Act.
" (c) For the purpose of the exercise by any agency referred
to in subsection (b) of its powers under any Act referred
to in that Subsection, a violation of any requirement
imposed under this title shall be deemed to be a
violation of a requirement imposed under that Act. In
addition to its powers under any provision of law
specifically referred to in subsection (b), each of the
agencies referred to in that subsection may exercised,
for the purpose of enforcing compliance with any
requirement imposed under this title any other authority
conferred on it by law.
"§ 622. Relation To State Laws
"This title does not annual, alter, affect, or exempt any
person subject to the provisions of this title form complying
with the laws of any State with respect to the collection,
distribution, or use of any information on consumers, except to
the extent that those laws are inconsistent with any provision
of this title, and then only to the extent of the inconsistency."
APPENDIX A
Federal Enforcement Agencies
The following list indicates the federal agencies that enforce
these laws for particular classes of creditors. Any questions
concerning a particular creditor should be directed to its
enforcement agency.
National banks
Comptroller of the Currency
Consumer Examinations Division
Washington, D.C. 20219
State member banks
Federal Reserve Bank serving the district in which the state member
bank is located.
Nonmember insured banks
Federal Deposit Insurance Corporation Regional Director for the
region in which the nonmember insured bank is located.
Savings institutions insured by the FSLIC and members for the
FHLB system (except for savings banks insured by FDIC):
The Federal Home Loan Bank Board Supervisory Agent in the
district in which the institution is located.
Federal credit unions
Regional Office of the National Credit Union Administration serving
the area in which the federal credit union is located.
Creditors subject to Interstate Commerce Commission Office
Proceedings
Interstate Commerce Commission
Washington, D.C. 20523
Creditors subject to Packers and Stockyards Act: Nearest
Packers and Stockyards Administration area supervisor
U.S. Small Business Administration 1441 L Street, N.W.
Washington, D.C. 20416
APPENDIX B
Sample Cease & Desist Letter
First, Middle, Last, Jr./Sr.
Street
City, State, Zip Code
January 25,1997
Collection Agency
Address
City, State Zip Code
RE: Account #(collection agency's number)
(agent's name who appeared on the letter):
Let this letter serve as legal notice under federal law
that regulates the activities of collection agencies and
their legal representatives.
You are hereby notified under provisions of Public Law
95-109, Section 805c, The Fair Debt Collection
Practices Act, to hereby cease and desist in any and all
attempt to collect the above debt.
Your failure to do so will result in charges being filed
with the state and federal regulatory agencies
empowered with enforcement.
You are further warned that if any derogatory
information pertaining to me is reported to any reporting
agency after receipt of this notice, it too will result in all
legal remedies being sought.
Sincerely,
(Signature)
APPENDIX C
Glossary Of Legal Terms For The Layperson
Defined here are the terms you are most likely to encounter. The
study of law is by no means as simple as the definitions given
below. These terms are encountered in such areas as real estate,
contracts of various kinds, banking, leasing, borrowing and lending,
bankruptcy, copyrights and patents, insurance, licensing, notes, and
a great many other areas of everyday business.
Understandably, no attempt is being made to make you a law
expert, only to give you a general knowledge so you can continue
transactions without having to seek out an explanation. Terms,
whose legal meaning can be found in most any dictionary are not
included here. Terms, whose legal meaning differs from the
dictionary meaning are included.
A PRENDRE - A writ to take the land
ABET - To encourage or excite one to commit a crime
ABEYANCE - Temporarily holding back, as with the settlement of
an estate
ABSOLUTE CONVEYANCE - An instrument by which the right or
property is transferred free of any condition or qualification
ABSOLUTE PROPERTY - Full and complete ownership (does not
refer to real estate)
ABSTRACT OF TITLE - A summary of the important parts of a
deed or other instrument showing evidence of title. It is
usually arranged in chronological order showing origin,
agreements and history of ownership
ACCEPTANCE - The act of accepting an offer which results in a
binding contract; an agreement to pay a note; an agreement
to terms
ACCEPTOR - The one who receives or promises to pay a bill of
exchange or draft
ACCOMMODATION PAPER - A bill or note made, drawn, accepted
or endorsed by one person as a favor for another person as
distinguished from a note given for value received
ACCOUNTS RECEIVABLE - Debts owed to a company in the
normal course of business
ACCUMULATIVE LEGACY - A bequest given in addition to that
already given
ACKNOWLEDGMENT - A legal admission of a fact before a public
official; a certificate issued by a public officer such as a
notary public before whom the acknowledgment was made;
a receipt
ACQUITTANCE - A written document releasing one from debts or
other liability
ACTION - A formal proceeding in a court of justice; to bring suit
ACTIONABLE - Incidents or circumstances that are legal grounds
for action or lawsuit
ADMINISTRATOR - A person appointed to conduct or manage the
affairs of another
AD VALOREM - Latin for, "according to value" (example: tax on
real estate)
ADVERSE POSSESSION - Possession of land in opposition to the
title of another
AFFIDAVIT - A declaration in writing and sworn before a person
legally authorized to administer it
AGENT - One authorized to represent and act for another in the
transaction or management of some business or affairs
AGREEMENT - A contract; a meeting of the minds of two or more
parties to form a mutual contract for a consideration
ALIENATION - The act of transferring to another, particularly of real
estate, where an estate is voluntarily resigned by one and
accepted by another
AMENDMENT - Alter or correct an error or make a change in a
document, usually for the better, and usually by means of an
addition
AMICABLE ACTION - An action carried on according to a mutual
understanding and arrangement
AMORTIZATION - The payment of debts by installments at stated
intervals for a definite time. The term is usually applied to
the payment of stocks, bonds and mortgages.
ANIMO REVOCANDI - Latin for, "with the intention of revoking"
APPEAL - To complain to a superior court of an injustice or error
committed by a lower court, and asking the higher court to
correct or reverse the decision
APPELLATE COURT - A court having jurisdiction of appeals and
reviews
APPELLEE - The party against whom an appeal is made
APPROPRIATION - The application of money paid by a debtor to
the creditors
ARBITRATION - The investigation and settlement of a matter in
dispute between opposing parties by persons or
organizations chosen by the parties and whose decision is
usually binding upon the parties by a former agreement
ARTIFICIAL PERSONS - Persons created and devised by human
laws (example: a corporation)
ASSESSED VALUATION - The value placed upon real or personal
property
ASSESSMENT - A value set on property for the purpose of
establishing a tax rate
ASSIGNEE - One who receives property from another by
assignment, conveyance, device, descent, or act of law
ASSIGNMENT - The transfer of real or personal property from one
party to another
ASSIGNOR - One who assigns or transfers property to another
ASSURED - The one being insured by an insurance company
against the loss described in the policy
ATTACHMENT - The taking or seizure of property by a legal
process
ATTEST - To witness or testify to the signing of a document and
subscribing to it as a witness
ATTORNEY IN FACT - A private attorney authorized by another to
act in his place for a particular purpose
AWARD - The judgment or decision made or given by a judge or
arbitrator in the matter submitted to them
BAILMENT - The delivery of goods for some particular purpose by
one person to another to be ultimately redelivered to the
owner or dealt with according to the owner's directions
BANK DRAFT - A bill of exchange drawn by one bank on another
bank
BEARER - One who holds a note, draft, or bill of exchange
BEQUEST - A gift of personal property by will
BLANK INDORSEMENT - A note or some other bill of exchange
which bears the name of the indorser, but does not mention
any name to whom it should be finally paid
BONA FIDE HOLDER FOR VALUE - One who takes negotiable
papers in good faith for a valuable consideration before it is
due
BY-LAWS - Laws or regulations made by a corporation for its own
government and conforms with the general law of the land
CAPITAL STOCK - The amount of money as distinguished from
property, raised from stockholders for use by a company or
corporation
CAUSE OF ACTION - Grounds on which a lawsuit can be sustained
CAVEAT EMPTOR - It is the buyers responsibility to examine, test
and inspect the item before purchase. Otherwise, it will be
the buyer's fault if it turns out to be defective, unless the
item has a warranty against such defect. Literally, it means
"Let the buyer beware."
CESTUI QUE TRUST - One who has the right and a beneficial
interest in an estate to which another has the legal title
CHATTEL MORTGAGE - A document giving a lien on personal
property as security for a debt on the performance of an
obligation
CHOSE IN ACTION - A thing one does not have possession of, but
has the right to it or the right to demand it
COINSURANCE - A clause in an insurance policy stating that the
insured will carry or be responsible for a certain percentage
of the property's value, and in the event of a lose, both the
insurance company and the insured become liable for their
respective percentage
COMMON CARRIER - A person or company who is in the business
of transporting people or property for a fee
COMMITTEE OF INCOMPETENT - Person(s) invested by court
order with the guardianship of a person or estate of one
judged incompetent
COMMUNITY PROPERTY - Property owned in common by
husband and wife. In community-property-law states,
property so owned becomes acquired by either spouse
during marriage.
COMPLAINANT - One who institutes suit against another
COMPOSITION - An agreement by which a creditor discharges the
debtor from paying certain debts owed
COMPROMISE - An arrangement to settle a dispute without resort
to the courts
CONSENT - An act of reason accompanied with deliberation,
weighing the good and evil on each side
CONSIDERATION - The material cause of a contract, without which
no contract is binding; the reason which moves the parties
to enter into contract; the price or motive of a contract; the
thing given in exchange for the benefit which is derived from
a contract
CONSTRUCTIVE FRAUD - Fraud inferred by law, as distinguished
from actual fraud
CONSTRUCTIVE NOTICE- Notice inferred by law, as distinguished
from actual notice
CONTRA BONOS MORES- Latin for, "against good morals"
CONTRIBUTORY NEGLIGENCE - A genuine act of negligence by
the injured party without which the injury would not have
occurred
CONVERSION - An unauthorized assumption and exercise of the
right of ownership over another's goods
CURTESY - An estate to which a man is by law entitled on the
death of his wife, when children of the marriage inherit the
fee title
CONVEYANCE - A written document by which property is
transferred from one person to another
DAMAGES - Compensation or indemnity which may be recovered
by any person who has suffered loss or injury through the
unlawful act, omission or negligence of another
DEBENTURE - A certificate showing rightful possession of property
which has been offered as collateral for a loan.
DEED POLL - A deed which is made by only one person
DE FACTO - Latin meaning "in fact". A corporation de facto is one
whose organization is defective to the extent that it may be
successfully attacked by the state
DEFEASANCE CLAUSE - A provision which will of itself render an
instrument null and void; a clause in a deed conveying real
property which provides that the deed shall be null and void
upon payment of the obligation by the debtor
DEFENSE - A denial by the defendant against the plaintiff's
complaint
DEL CREDERE - An agreement by which a factor, in selling goods
on credit for an additional commission, guarantees that the
purchase price will be paid by the seller
DEMISE - The transfer or conveyance of an estate to another
DESCENT - The transfer of title to property to the heirs upon the
death of an ancestor who dies without making a will
DEVISE - To make a gift of property by will
DISCHARGE IN BANKRUPTCY - An order of the court whereby the
bankrupt debtor is discharged from unpaid balance of
claims against him
DONATIO - A gift of land or other personal property
DOWER - The portion of a man's land to which his wife is entitled
upon his death for as long as she lives
DUCES TECUM - The party summoned to appear in court is
ordered to bring certain evidence requested by the court.
DUE PROCESS OF LAW - A judicial trial, and not a mere
declaration of legislative will by the passing of a law
DURESS - Compulsion by which a person is illegally forced to do
something
EASEMENT - The right of one person to use the land of another for
a special purpose, such as the right of way for a pipeline
ELEEMOSYNARY CORPORATION - A corporation organized for
charitable purposes
EMBLEMENTS - The profits of crops on sown land
EMINENT DOMAIN - The power of the government to take private
property for public use, providing a reasonable
compensation was paid
ENCUMBRANCE - A claim or lien against property which can lower
its value, as a mortgage or real property
EQUITY OF REDEMPTION - The right to redeem one's mortgaged
estate after a certain period of time by repayment of the
money due on the mortgage
ESCHEAT - Land going to the state upon the death of its owner with
lawful heirs
ESCALATOR CLAUSE - A clause giving the lender the right to
increase the interest rate after a specified time
ESCROW - Money, property, or a document held by a third party to
be delivered by the third party to the grantee upon the
performance or occurrence of certain conditions. The
deposit of the escrow places it beyond the control of the
grantor, but the title does not pass until the fulfillment of the
condition.
ESTATE - The interest which any person has in real estate or other
person's property
ESTATE IN COMMON - An estate in land held by two or more
persons
ESTATE IN DOWER - An estate which a woman is, by law, entitled
to claim upon the death of her husband
ESTATE IN FEE SIMPLE - The entire and absolute interest and
property in land by a man and his heirs forever
ESTATE FOR LIFE - A freehold estate, not for inheritance, which
one owns for life, or the life of another person
EX CONTRACTU - A right or cause of action arising out of a
contract
EX DELICTO - A right or cause of action arising out of a tort
EXECUTED CONTRACT - A contract which transfers the
possession of a thing, together with the right; a contract
which conveys a chose in possession, as distinguished from
a chose in action
EXECUTION - A writ issued to a law enforcement officer requiring
the execution of a judgment of the court
EXTENDED COVERAGE - Insurance against additional events, as
a fire insurance policy also covering lightning, windstorm,
hail, water and smoke damage, etc.
FACTOR - An agent whose business it is to buy and sell goods for
others on a commission and usually sells it under his own
name
FEE SIMPLE - Absolute ownership of land with the unrestricted
power of sale or other disposition
FIDUCIARY - A person who holds a position of trust and confidence
in relation to another person
FIRST MORTGAGE - The first lien on property pledged as security
FIXTURES - A thing that is attached to the building or land and by
law thus becomes a part of it
FORECLOSURE - The court proceedings for the sale of mortgaged
land or other personal property for the payment of money
owed
FREEHOLD - An estate of inheritance, or an estate for life, dealing
with real property
FUTURE ADVANCE MORTGAGE - A mortgage given to secure
future additional loans as well as the original loan
GARNISHEE - A party in whose hands money or property is
attached by the creditor of another and who had received
warning not to pay or deliver it to the defendant
GARNISHMENT - A notice to a person holding another's money or
property that the money or property is attached for the
purpose of applying it to pay a debt
GENERAL TANGIBLES - Personal property such as good will,
copyrights, trademarks, patents. (Accounts, chattel
paper and documents are not intangibles.)
GRANTEE - The person to whom a grant is made
GRANTOR - The one making the grant
GROSS NEGLIGENCE - The lack of care that every person with
common sense will take
GUARANTOR - A person bound by a contract or guaranty
HABENDUM - The clause in a deed which defines the extent of the
ownership granted
HEREDITAMENTS - Things capable of being inherited
HOLD OVER - To retain possession as a tenant of leased property
after the lease expired
HOLDING COMPANY - A corporation organized to hold the stock of
another corporations
HOMESTEAD - The home, houses and land where the head of the
family lives, owned and occupied as a home, and is
sometimes exempt from seizure by creditors
HYPOTHECATE - To pledge a thing, generally as security for a
loan, without delivering possession to the pledgee
IMPLIED ASSUMPSIT - A promise not formally made, but
presumed or implied from the conduct of a person
IMPLIED CONTRACT - A contract implied by reason and justice,
and which therefore the law presumes that every man
undertakes to perform
INCOMPETENCY - The legal status of a person unable to manage
his own affairs by reason of insanity, imbecility or
feeblemindedness
INCUMBRANCE - A legal claim or lien upon an estate, such as a
judgement or mortgage
INDEMNIFY - To secure against loss or damage; to make
reimbursement for a loss already suffered
INDEMNITY - A contract or insurance by which one person engages
to secure another against loss or damage
INDENTURE - A deed to which two or more persons are parties,
entering into mutual obligations
INJUNCTION - A restraining order issued by the court requiring a
person to refrain from, or to do, a particular act
IN RE - means "in regard to"
INSOLVENCY - The financial condition of a person or company is
such, that all assets are not enough to pay all debts
INSTRUMENT - A written document, including checks, drafts,
promissory notes, certificates, bonds, stocks
INSURABLE INTEREST - A person must have a serious stake in
another person's property, life or health in order to become
the beneficiary in an insurance policy.
INTANGIBLE PROPERTY - Property which has no physical
existence but is only a right to receive property
INTERSTATE COMMERCE - Transportation of people or property
between the states of the United States
INTESTATE - A person who dies without leaving a will
JOINT TENANCY - A holding or interest in land or other property by
more than one party
JUDGMENT - The final decision of a court as a result of an action or
proceeding instituted in such court (also spelled Judgment)
JUNIOR MORTGAGE - A second, third, etc., mortgage; subsequent
to the claims of any prior mortgage
LACHES - Neglect to make a claim within a reasonable time
LEASE - A contract in writing, whereby one person, the lessor,
agrees to give possession of property to another person, the
lessee, in consideration of the payment of money
LEGACY - A gift of personal property by a will
LETTER OF CREDIT - A document or assurance given by a bank to
its customer that the bank will honor drafts or other
demands for payments as requested by another person
LIBEL - Any malicious defamation expressed in print, writing,
picture, effigies or by some act other than by spoken words,
that is calculated to injure the character or reputation of a
person by bringing him into ridicule
LIEN - A claim by one person upon the property of another person
while such property is in his possession, to enforce the
payment of money
LIFE ESTATE - An estate held for the life of the party holding it, or
of some other person. It is not an estate of inheritance.
LIMITED PARTNERSHIP - A partnership consisting of one or more
general partners, jointly responsible as ordinary partners, by
whom the business is conducted, and one or more special
partners, contributing in cash payments a specific sum as
capital to the common stock, and who are not liable for the
debts of the partnership beyond the funds so contributed
LIQUIDATED DAMAGES - A sum of money specifically agreed
upon between the parties to a contract, to be paid in the
event of the nonperformance of the contract by either
L.S . - Stands for locus sigilli. This is the abbreviation found at the
place where the seal is put on a written document, such as
a notary seal.
MALICE - The doing of a wrongful act intentionally, without just
cause or excuse
MATERIALMAN - A person who furnishes materials to be used in
the construction or repair of buildings or structures
MECHANICS LIEN - A lien upon real property to secure the
payment of debts owed those persons who contribute labor
or materials to the construction or improvement of the
property
METES AND BOUNDS - The boundary lines of lands, with their
termination points, angles, distinctive objects, end and side
lines
MISFEASANCE - The improper performance of some act which one
may lawfully do
NECESSARIES - Things furnished to a child as food, clothing
lodging, medical attention, and whatever else may be
necessary for his proper and suitable maintenance,
according to his state and condition in life
NEGOTIABLE INSTRUMENT - Any instrument, the rights of action
on which is freely assignable from person to person
NEGOTIABLE - A term applied to checks, bills of exchange,
promissory notes, which one made negotiable by being
make payable to order or to bearer
NDN CORPOS MENTIS - Latin for, "not in possession"; meaning,
not having power of one's mind or mental faculties
NOTARY PUBLIC - A public officer before whom various acts,
chiefly in mercantile matters are required to be done, such
as the acknowledgment of certain papers or documents in
his presence, who then certifies them in writing under his
official seal.
OPTION - A legal power or right to decide whether or not one will
buy or sell within a certain time for a stipulated price
PARTICULARS - a written statement of the plaintiff's demand or the
defendant's setoff, usually referred to as a bill of particulars
PARTY WALL - A wall erected on the line between two properties
belonging to different persons for use of both
PERSONAL ASSETS - Personal property held by an executor or
administrator of an estate, responsible with the debts or
legacies of the testator or interstate and applicable to that
purpose
PERSONAL PROPERTY - Property consisting of movable things
and not descendible to the heirs at law
PERSONAL REPRESENTATIVE - In the laws of wills, the one who
administers the estate of a deceased person
PLEA IN ABATEMENT - A plea to abate the plaintiff's action and
put it off for the present
PLEDGE - The deposit of goods with a creditor as security for a
debt or obligation
POWER OF ATTORNEY - An instrument in writing, authorizing
another person to act on one's behalf either generally in all
matters or to do a specified act
PREFERRED STOCK - Stock which entitles its owners to dividends
out of net profits before the holders of common stock
PRESCRIPTION - A mode of acquiring title to property by long and
continual usage
PRIMA FACIE - At first sight. A person is said to have a prima-facie
case when the evidence is sufficient for proof until it is
contradicted.
PRINCIPAL - The person who gives authority to an agent to do
something for him
PROBATE - Determining the validity, particularly of a will before a
probate or surrogate court
PROMISSORY NOTE - A promise in writing by one person to
another to pay on demand or at a fixed or determinable
time, a certain sum of money, to bearer of note or to the
order of
PROTEST - A declaration against an act about to be done or
already done; a formal statement in writing that a certain
(describing it), was on a certain day presented for payment
or acceptance, and that such payment or acceptance was
refused
PROTEM - Abbreviation for pro t empore; meaning "temporarily", or
for the time being
PUNITIVE DAMAGES - Damages intended to punish a wrongdoer;
vindictive damages
PURCHASE MONEY MORTGAGE - The price paid or agreed to be
paid by the purchaser of real estate
QUANTUM MERUIT - means "as much as he deserves", an implied
promise to pay for labor as much as is reasonably deserved
QUASI CONTRACT - means "a contract implied by law"; not
actually expressed, but implied or presumed by law
QUITCLAIM - A deed by which some right, title, interest or claim
which one person has in an estate held by another, is
released or relinquished
RATE OF EXCHANGE - The actual price at which a bill, drawn in
one country upon another country can be bought or
obtained
REAL ACTION - An action for the recovery of real property
REAL PROPERTY - Land, tenements and hereditaments and
whatever is erected on, growing on, or affixed to it
RECEIVER - Someone who has been appointed to take possession
of property that is subject to litigation and to hold such
property and apply the profits, or dispose of the property
according to the direction of the court
RECOUPMENT - Keeping back something which is due, because
there is equitable reason to withhold it
REFEREE - A person appointed by the court to take testimony from
the parties and report back to the court for judgement; the
person in charge of the proceedings during the
administration of the bankrupt estate.
RELEASE - A relinquishment of some right or claim by one person
in favor of another
REPLEVIN - A proceeding by which the owner recovers his own
property in the possession of another person
RES - Means "the thing"; the subject matter of the litigation
RESIDUARY ESTATE - The part of the estate which remains after
payment of all debts.
RIDER - A provision added to a document or insurance policy,
whereby something is restricted or enlarged
RIGHT OF REDEMPTION - The right to reclaim property from a
claim or lien by payment or what is due
SEAL - An impression upon a written instrument to show that the
instrument was executed in a formal manner
SECURITY FOR COSTS - A security which a defendant may
require of a plaintiff who does not reside within the
jurisdiction of the court, for the payment of costs as may be
awarded to the defendant
SEPARATE MAINTENANCE - The maintenance of a woman by her
husband after an agreement to live separately
SETOFF - A counterclaim by the defendant for the purpose of
reducing the claim of the plaintiff
SLANDER - The use of spoken words which tend to injure the
reputation of a person
SPECIAL DAMAGES - Damages not necessarily resulting from an
injury complained of, but as specifically stated and are not
implied
SPECIFIC PERFORMANCE - Performance of a contract in precise
form or according to the precise terms agreed upon
STATUTE OF LIMITATIONS - A statute fixing and limiting certain
periods of time, beyond which rights of action cannot been
forced
SUT JURIS - "Capable of managing one's own affairs"; not under
any legal disability or guardianship
SURETY - One who binds himself to do a certain act in return of a
sum of money, in the event another fails to do it
SURETYSHIP - A contract whereby one person engages to be
answerable for the debt or default of another person
TANGIBLE PROPERTY - Property that has physical existence,
such as land, buildings, furniture consumer goods,
equipment
TENANCY IN COMMON - The holding of land by several persons,
by several distinct titles, but by unity of possession
TENANCY AT WILL - The occupation of premises by a person
without a lease or after termination of a lease with neither
the approval or disapproval of the landlord; a tenancy ended
at the will of either landlord or tenant
TERM - A limited and fixed period of time
TESTAMENT - The disposition of personal property to take effect
after the death of the person making it
TESTATE - The opposite of intestate; one who leaves a will
TESTIMONIUM CLAUSE - The clause of a document which
concludes with: "In witness whereof, the parties to these
presents have hereunto set their hands and seals"
TITLE - A person s right to property
TITLE INSURANCE - A policy which insures the buyer of real
property against loss should the title be defective
TRUST - Holding of another person's property subject to the duty of
employing it according to the directions of the person from
whom it was obtained
TRUSTEE - A person who by agreement holds or administers some
property for the benefit or use of another person
UNDUE INFLUENCE - The mental coercion of one person over
another person
USURY - Interest paid for borrowing money beyond the maximum
permitted by law
VALUABLE CONSIDERATION - An amount of money or other form
of return which could be considered adequate
VOIDABLE - That which may be voided, but which is not absolutely
void by itself
WAIVER - A voluntary relinquishment of a known right; an election
to forgo some advantage which a person could have
demanded
WASTE - The destruction, misuse, alteration, or neglect of the
premises by a tenant which is against the interest of the
landlord
WATERED STOCK - Shares of stock issued by a corporation as
fully paid, when in fact the shares are not fully paid for
WITHOUT RECOURSE - A clause used in the endorsement of
negotiable instruments by which the indorser intends to
exempt himself from liability to other parties
WRIT - An order issued by a court for the purpose of requiring the
performance of a specified act by the person to whom it was
directed
Each One Updated For 1997!
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Title
How To Borrow Your Way To Wealth
Cash Now: The Uncommon Sense Guide To Raising Cash Fast & Rapid Debt Reduction
How To Use The Law To Instantly Stop Creditor Harassment
Fresh Start: The Authoritative Guide To Consumer Credit Repair
How To Invest Now To Build A Future Fortune (Being updated—available soon)
The Layperson's Crash Course In Business Credit
How To Start Or Expand Your Business With "Street Smart " Financing
How To Attract The Perfect Investor For Your Business
How To Write A Creative Business Plan (Being updated—available soon)
How To Obtain Local, State And Federal Help For Your Business
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