Financial Planning

Federal Laws and Regulations That Protect You

There are a number of federal laws that protect you as a consumer. We will introduce some of the most prominent ones to you and briefly describe how they protect you.

Laws and regulations that protect your accounts

The Truth in Savings Act requires financial institutions to disclose the terms of all consumer bank accounts. Before opening a new account be sure to request, read and understand all of the terms of the account. Although a disclosure may be given to you, the representative opening your account may not review all of the terms with you. Some of the required information that a bank must give consumers include balance requirements, interest rate information and fee information. The Truth in Savings Act also requires your bank to periodically send you statements for your accounts. This statements may be electronic if you've agreed or requested not to have paper statements.

Electronic Fund Transfer Act creates and defines rights, liabilities, and responsibilities of banks as well as the customers who use electronic fund transfer services. Electronic fund transfer services include the use of debit cards, ATM's, computer transactions and telephone transactions. This act also requires financial institutions to limit consumer liability if debit/ATM cards are lost or stolen.

Expedited Funds Availability Act limits the amount of time a bank can hold a check deposited into your checking account. Know your banks funds availability policy and how soon you can access deposited funds.

The Federal Deposit Insurance Corporation deposit insurance regulations protect your deposited funds if your bank fails. However, the FDIC does not insure non-deposit investment products such as mutual funds, stocks, bonds and annuities. When deposited funds are insured, the FDIC will pay up to the maximum amount allowed by law. Typically, FDIC coverage is $100,000, but has occasionally been extended during times of financial crisis. Coverage is also account owner specific.

Laws that protect you when applying for loans or credit

The Equal Credit Opportunity Act (TILA) requires lenders to disclose the complete and total cost of your loan including finance charges and APR. TILA also gives consumers the right to cancel certain types of home loans within 3 days.

The Equal Credit Opportunity Act (ECOA) protects your rights as a consumer throughout every stage of the loan process. The Equal Credit Opportunity Act promotes the availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, age, marital status, and public assistance status. In addition, you cannot be denied a loan because you have filed a complaint against the bank. The ECOA restricts the lender from requesting any of the following information:

1. For income derived from alimony or child support unless you want it considered as part of your income. The lender also cannot discount or refuse to consider consistent part-time income, annuities, pensions, child support or alimony payments.
2. For information about a spouse or former spouse unless your spouse is applying with you. If you are jointly applying or if the loan is secured, the lender may ask your marital status but can only use the terms unmarried, married and separated. If you do not qualify on your own, the lender may require a guarantor or cosigner but cannot require it to be your spouse. However, in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and Puerto Rico), lenders may request information concerning your spouse.
3. About birth control practices or intentions of having children. However, a lender may ask about the number and ages of your dependents.
4. About whether your are male or female. Courtesy titles such as Mr. Mrs, Miss and Ms. may be requested.
5. For your race, color, religion, or national origin.

The lender must notify you in writing, within 30 days of the date of the loan application whether you were approved or denied. If you are denied, the notice should contain:

1. the name and address of the lender
2. the name and address of the federal agency you can contact if you feel you've been discriminated against, and
3. either a statement of the specific reasons for denial or a notice that you may request the specific reasons for your denial.

The Fair Credit Reporting Act requires that the lender notify you if you are denied a loan or credit due to the information in your credit report. This notice is usually combined with the notice denying the loan or credit account and should contain

1. the name, address, and telephone number of the credit reporting agency that provided the credit report to the lender
2. a statement that the credit reporting agency did not make the decision to deny your application
3. a notice of your right to obtain a free credit report within 60 days of receiving the notice,
4. a notice of your right to dispute the information in your credit report.

The Fair Debt Collection Practices Act helps to eliminate abusive debt collection practices. Under this law, debt collectors other than your creditor cannot:

1. Contact you at any unusual time or place.
2. Contact you at work if you have informed them not to call you there.
3. Use threat or violence or other criminal means to harm you or your property.
4. Call you with the intent to annoy, abuse, or harass you.
5. Call you without identifying themselves.
6. Use deceptive or misleading methods to collect debt.

The Fair Credit Billing Act requires creditors to promptly credit payments and correct billing mistakes for open-end accounts such as credit cards. It also allows you to withhold payments on defective goods. Some examples of billing errors include a charge for an item or service that you did not purchase, a charge that is different from the actual purchase price, and an error in math. If you believe there has been an error on your bill you should notify your creditor in writing immediately or within 60 days of receipt of your incorrect bill. Be sure to keep a copy of the letter that you send to your creditor. The lender/creditor is required to acknowledge your letter within 30 days. Within 90 days, the lender must either correct the problem or explain why they believe the bill is correct.

Resolving complaints by writing to your regulators

If you have written a letter to your bank and it did not produce the desired results, you can write to the banks regulator for further assistance. Include the following information to help the regulators investigate your complaint:

1. State the problem briefly. Explain what occurred and how you would like to see the matter resolved.
2. Include your full name, address, and daytime and evening telephone numbers with area codes.
3. Provide the complete name and address of the financial institution, along with the names of employees who have assisted you with your problem.
4. Include pertinent account information, such as account numbers and the type of product you have (checking account, savings account, home equity loan, or home loan).
5. Include important dates, such as the date a transaction took place or the date you contacted the financial institution about your problem.
6. Send copies of documents that may help explain your problem. Keep the original documents.
7. Sign and date your letter.

Privacy notices

The law requires financial institutions to protect your financial information and requires companies that are involved in financial transactions to send you privacy notices. Privacy notices explain how the company handles and shares your personal financial information. Your financial institution may share your information to offer you more services, introduce new products, and profit from the information they have about you.
Types of privacy notices

1. Initial Privacy Notice - You will usually receive a privacy notice when you open an account or become a customer of a financial institution.
2. Annual Privacy Notices - Each financial institution you have an ongoing relationship with must give you a notice of its privacy policy once a year.
3. Notice of Changes in Privacy Policies - If a company changes its privacy policy, it will either send you a revised privacy notice or tell you about the changes in the company's next annual notice.

Opting out

If you do not wish for marketers and other companies to have your personal financial information or if you wish to limit the promotions that you receive, you may want to consider "opting out." Federal privacy laws give you the right to stop or opt out of some sharing of your personal financial information. You may opt out of most information sharing with other companies. However, you cannot opt out and completely stop the flow of all your personal financial information. For instance, the law permits a financial institution to share certain information about you without giving you the right to opt out. The company may give your information to the following:

1. To firms that help promote and market products offered by the company itself or jointly with another company.
2. To firms that provide data processing and mailing services for your company.
3. When a court orders it to do so.
4. To credit bureaus about your payment history on loans.

Information about your relationship with a company may also be shared with companies that are jointly owned or similarly affiliated with that company. If you do not opt out within a reasonable amount of time, the company is free to share certain personal financial information.
You can also opt out of receiving most pre approved offers of credit or insurance by calling 888-5-OPTOUT (888-567-8688) or visit www.optoutprescreen.com.

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