Consumer Credit Protection Act



The United States government is known for being pro people, pro consumer. That is why the Consumer Credit Protection Act was established. This federal law was created in 1968. It was the first federal consumer protection law in the country.

This law protects borrowers through several ways. First, it requires the full disclosure of the terms of financial charges in any transaction. It also limits the garnishment of wages. Lastly, it regulates the use of charge accounts. Garnishment is a legal procedure for collecting debt. In garnishment, the creditor can get the debtor's property when that property is not in the possession of the debtor. Garnishment is usually obtained by the creditor through a court order. The Consumer Credit Protection Act paved the way for several laws. The most popular of which are the Truth in Lending Act and the Fair Credit Reporting Act. The Truth in Lending Act is contained in Title I while the Fair Credit Reporting Act is the Title VI of the Consumer Credit Protection Act.

The Truth in Lending Act protects consumers by mandating that the terms in credit transactions should be fully disclosed and explained to potential debtors. All lending arrangement as well as costs should be transparent. This law also prohibits lenders or creditors to offer loan terms that are only available or applicable to preferred debtors or borrowers. This law also gives a consumer the right to cancel any credit transaction if it involves some situations.



Meanwhile, the Fair Credit Reporting Act is applied to businesses that collect consumer information for other companies. This law regulates the collection, distribution and use of such information. Together with the Fair Debt Collection Practices Act, this law forms the foundation of consumers' credit rights in the country.

The Consumer Credit Protection Act was a landmark law. It was well applauded and found to be very fair for consumers. For the first time, creditors are required to disclose the terms of the credit transactions. This allows consumers or debtors to compare several credit deals and get the best deal. Since the law's inception in 1968, many consumer credit protection legislation's have followed. Although they have different provisions, they all speak the same language. That is to ensure "fair" and "equal" credit transactions. These laws aim to reduce the hassle of consumer credit and to provide good treatment of consumers or debtors.