If you take a look at the credit report and score of the American consumers you will see that they are in an increasingly vulnerable position. They seem to have no clue about how people save and spend.
Here in the roles of the Consumer Credit Protection Act of 1968 come into play. It is the specific law that has been passed by the Congress to protect the consumers as well as their financial records from malpractice and abuse.
In the following years there were several other laws that were passed to refine consumer rights as well as their duties along with the power of the government spelled out different things such as:
- How it can access the information of the customers of different banks
- How banks treat their borrowers and
- The ways in which these banks handle customer deposits.
However, even as the capability to collect financial data and records expand, it is the federal laws that limit what the others are permitted to collect when it comes to the financial history of any person and the things that they can do once they have the information they want.
Right to Financial Privacy Act
According to the federal law there is a Right to Financial Privacy Act that however limits the government from going berserk and access personal financial records. Once again the Congress passed this law. This law protects the confidentiality of the sensitive personal financial records. This was designed and implemented in response to the Supreme Court’s United States v. Miller ruling in 1976.
- According to this ruling it was found that the security and safety of the bank account records of the consumers are not subject to the constitutional privacy protection.
- On the other hand,there was another law extended in 1978 called the Fourth Amendment privacy protection policy to such sensitive information.
- In addition to that, as per the Financial Privacy Act, the government officials typically must get a written consent from the consumer or obtain a search warrant or subpoena in order to peruse the financial records of any consumer.
Prior to this the governments were able and authorized to conduct searches on personal info of the consumers of a bank but now the investigators have to serve notice on the account holder.
In addition to that they will also have to wait for at least 10 days for a response from the side of the consumer or at least 14 days from the date the notification was mailed in case there is no response from the consumer.
However, this law is applicable to only a few specific arms of the federal government such as:
- Their officers
- Their agents
- Their agencies and
- Their departments.
It did not have any control over the local or state governments just as it did not have any control on the activities of the private businesses.
This act identifies the type of financial institutions that it covers. It covers all those accounts that are held at the traditional banks. In addition to that it also relates to those records that are held by the issuing entities of merchant credit. That means all those department store and gas station credit card accounts typically fall under the regulations of this particular Act.
In 2002 however, this specific Act was amended and expanded to include a wide assortment of financial institutions and even those institutions that conventionally cannot be considered as a financial institution commonly. These include:
- Depository foundations for example banks, credit unions and thrifts
- Money lending services businesses such as Liberty Lending
- The US Postal Service
- Securities and futures brokerages
- Money order issuers
- Travelers’ check issuers
- Commodity trading advisors and
- Casinos and card clubs
However, the protection provided by this specific law is limited to partnerships of five or fewer persons as well as individuals. The law typically did not include any large groups and financial companies such as the trade associations, labor unions and others.
Exceptions to the rule
Just like all other, there are a few exceptions to this rule as well and it includes:
- You may not be informed in advance that a specific government agency is viewing your files under specific circumstances
- The bank as well as the other financial institution holds the right to notify the police if there is any sign or info of illegal activity in your account
- The bank in which you hold your account also has the right to submit necessary copies of financial records of your account to the court in order to prove an attempt to collect a debt or a bankruptcy claim and
- Any financial institution may also release your account records provided that they remove all personal identification information.
However, this specific law does not apply to any supervisory or consumer rights agency that needs your account records to investigate any consumer complaints. In such situations, these records will be used typically for scrutinizing the financial institution and not the consumer.
The credit practices rule
The Credit Practices Rule was also adopted by the Federal Reserve Board in 1985. According to this rule the rights of consumers in debt are protected. This law applies to different consumer credit contracts that are typically made by the creditors especially with the car dealers, different financing companies and departmental stores. However, this law is not applicable to the real estate purchases or even the bank loans and contracts with loan associations. There are a few features of this law that are unique. These are:
- This law covers all the mobile homes and houseboats.
- The rule blocks the banks as well as all its subsidiaries from putting specific provisions in consumer credit contracts.
These restricted provisions include any probable clause that will either waive the right of the borrower to be notified in advance regarding a court hearing or relinquishing of the rights of the customer that may be heard in court, provided that a suit is brought up alleging that there has been a debt default.
Therefore, theFederal Trade Commission has done a wonderful job in protecting credit and consumer rights.
