What Is the Consumer Credit Protection Act?

Most people need to access credit at some point in their lives. Unfortunately, some lenders take advantage of that fact and try to dupe consumers into high-interest or exploitative financing agreements.

The Consumer Credit Protection Act (CCPA) was passed in 1968 to protect consumers and require more transparency from lenders. It’s expanded over the years to include several major consumer protection laws.

What is the Consumer Credit Protection Act, and how does it impact you?

What is the Consumer Credit Protection Act (CCPA)?

If you’re just learning about consumer protection laws, you may wonder: What is CCPA designed to do? The CCPA is a massive piece of legislation that includes several consumer protection laws you might recognize, such as:

• Title III (federal restrictions on wage garnishment)
• The Fair Credit Reporting Act (FCRA)
• The Truth in Lending Act (TILA)
• The Equal Credit Opportunity Act (ECOA)
• Fair Debt Collection Practices Act (FDCPA)
• Electronic Fund Transfer Act (EFTA)

These laws differ, but they share a common goal: to protect consumers from deceptive or unfair lending, debt collection, and credit reporting practices.

Why the CCPA was created

There were many reasons behind the creation of the CCPA. Here are just a few:

• To stop deceptive lenders from tricking consumers 
• To promote transparency in the world of lending
• To shield consumers from unfair credit damage
• To standardize credit reporting
• To stop workers from losing too much of their income to creditors

The CCPA represented a cultural shift in the world of lending. Historically, many people believed that it was the consumer’s responsibility to identify and steer clear of predatory lenders. With the passage of the CCPA, lenders were forced to take meaningful steps toward transparency.

What laws are part of CCPA?

Here’s a closer look at each of the major laws that make up the CCPA:

Title III 

This section places limitations on wage garnishment. Once a creditor gets a court judgment against a debtor, they may have the right to garnish the debtor's wages. Title III of the CCPA limits wage garnishment to either 25% of weekly disposable income or the difference between disposable earnings and 30 times the minimum wage. 

However, larger amounts may be garnished if the debtor has past-due taxes or child support. Depending on the circumstances, 40%–60% of an individual’s wages may be garnished to cover child support and tax debt.

The Fair Credit Reporting Act (FCRA)

Your credit report and credit score can either make it possible for you to access credit or bar you from opportunities. The FCRA was passed to ensure the accuracy of credit reports and give consumers a clear way to dispute errors. It also entitles consumers to a free annual copy of their credit report.

The Truth in Lending Act (TILA)

The TILA requires credit card companies and other lenders to disclose interest rates and other important loan terms. It also standardizes reporting requirements to make it easier for consumers to compare options.

The Equal Credit Opportunity Act (ECOA)

This law forbids lenders from taking anything other than consumer creditworthiness into account when making credit decisions. The ECOA makes it unlawful for lenders to use age, race, sex, and other factors to disqualify an applicant.

Fair Debt Collection Practices Act (FDCPA)

This section regulates the actions of third-party debt collectors. It bars them from using abuse, deception, coercion, and unfair practices to get consumers to pay their debts. For example, debt collectors may not threaten consumers with arrest to scare them into paying. They also may not misrepresent the amount of the debt to pad their profits.

Electronic Fund Transfer Act (EFTA)

Electronic transactions (including transactions online and through ATMs) have simplified finances for many. However, electronic transactions also create a potential for errors. The EFTA regulates bank withdrawals and ATM transactions, and limits consumers’ liability for fraud if their credit or debit card information is stolen.

What to do if your CCPA rights were violated

If your rights under the CCPA have been violated (or you suspect that they have), you have recourse. Depending on the nature of the violation, you may take one or more of the following actions:

File a Consumer Financial Protection Bureau (CFPB) complaint

The CFPB is tasked with enforcing several parts of the CCPA. If a debt collection agency has violated your rights or you believe that a lender is in violation of the TILA, the CFPB may take legal action.

File a Federal Trade Commission (FTC) complaint

The FTC handles fraud complaints and those involving credit reporting or mishandling of data.

Contact your state attorney general’s office

In many states, the office of the attorney general is responsible for investigating consumer complaints. If there’s enough evidence (or the company has violated the rights of numerous state residents), they may take civil action.

File a dispute

If you’ve found incorrect or incomplete information on your credit report, you can file a formal dispute with the company that reported it. You should also dispute the information with all three credit bureaus (Experian, Equifax, and TransUnion).

File a lawsuit

In some cases, filing a formal lawsuit may be the best course of action. It’s a good idea to consult an attorney before taking this step.

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