BLaw Ch. 20

Regulation Z (disclosure requirements of TILA)

- Applies to installation contracts (more than 4 installments) - All of the terms of a credit instrument must be clearly and conspicuously disclosed - A lender must disclose the annual percentage rate (APR), finance charge, amount financed, and total payments.

Federal Food, Drug, and Cosmetic Act

- Protects consumers against adulterated and misbranded foods and drugs - Charges the FDA with ensuring drugs are safe and effective before being marketed to the public

Truth-in-Lending Act (TILA)

A disclosure law that applies to firms who lend funds, sell on credit, or arrange an extension of credit - Disclosure Requirements (Regulation Z)

Regulation Z

A set of rules issued by the Federal Reserve Board of Governors to implement the provisions of the Truth-in-Lending Act

Bait-and-Switch Advertising

Advertising a product at an attractive price and then telling the consumer that the advertised product is not available or is of poor quality and encouraging her or him to purchase a more expensive item.

Deceptive Advertising

Advertising that misleads consumers, either by making unjustified claims about a product's performance or by omitting a material fact concerning the product's composition or performance

1. A company may not retroactively increase the interest rates on existing card balances unless the account is sixty days delinquent

Amendments to Credit-Card Rules: 1. A company may not retroactively increase the interest rates on existing card balances unless the account is sixty days delinquent

2. A company must provide 45 days' advance notice to consumers before changing its credit-card terms

Amendments to Credit-Card Rules: 2. A company must provide 45 days' advance notice to consumers before changing its credit-card terms

3. Monthly bills must be sent to cardholders 21 days before the due date.

Amendments to Credit-Card Rules: 3. Monthly bills must be sent to cardholders 21 days before the due date.

4. The interest rate charged on a customer's credit-card balance may not be increase except in specific situations, such as when a promotional rate ends.

Amendments to Credit-Card Rules: 4. The interest rate charged on a customer's credit-card balance may not be increase except in specific situations, such as when a promotional rate ends.

5. A company may not charge fees to a customer for being over his or her credit-card limit except in specified situations

Amendments to Credit-Card Rules: 5. A company may not charge fees to a customer for being over his or her credit-card limit except in specified situations

6. When the customer has balances at different interest rates, payments in excess of the minimum amount due must be applied first to the balance with the highest rate

Amendments to Credit-Card Rules: 6. When the customer has balances at different interest rates, payments in excess of the minimum amount due must be applied first to the balance with the highest rate

7. A company may not compute finance charges based on the previous billing cycle - (a practice known as Double-Cycle Billing, which hurts consumers because they are charged interest for the previous cycle even though they have paid the bill in full)

Amendments to Credit-Card Rules: 7. A company may not compute finance charges based on the previous billing cycle - (a practice known as Double-Cycle Billing, which hurts consumers because they are charged interest for the previous cycle even though they have paid the bill in full)

Cease-and-Desist Order

An administrative or judicial order prohibiting a person or business firm from conducting activities that an agency or court had deemed illegal

Validation Notice

An initial notice to a debtor from a collection agency informing the debtor that he or she has thirty days to challenge the debt and request verification

Multiple Product Order

An order requiring a firm that has engaged in deceptive advertising to cease and desist from false advertising in regard to all the firm's products.

Fair Debt Collection Practices Act

Collection agencies may not: - Contact the debtor at the debtor's place of employment - Contact the debtor at inconvenient or unusual times - Contact third parties other than the debtor's parents, spouse, or financial adviser about payment of a debt - Harass or intimidate the debtor Communicate with the debtor after debtor refuses to pay the debt, except to advise of further action to be taken The agency must include validation notice giving debtor time to challenge the debt

Advertising, Credit Protection, Food and Drugs, Product Safety, Labeling and Packaging, Sales

Consumer Law (6) (ACFPLS)

$50 dollars

Credit cardholder's liability for unauthorized charges

Lanham Act

False Advertising Claims (must enact) 1. an injury to a commercial interest in reputation or sales 2. direct causation of the injury by false or deceptive advertising 3. a loss of business from buyers who were deceived by the advertising

Formal Complaint, FTC Orders

Federal Trade Commission Actions

1. A reasonable consumer would be misled - advertising that appears true but is false - claims based on half-truths 2. Bait-and-Switch Advertising

Forms of Deceptive Advertising

Consumer Product Safety Commission

Has broad regulatory authority over the safety of consumer products, including: - Set safety standards for consumer products - Ban the manufacture and sale of products that pose an unreasonable risk to consumers - Remove imminently hazardous products from market and issue recalls - Require manufacturers to report on products if the products have proved to be hazardous - Administer other product-safety legislation

When the advertisement misleads the consumer

LO: 1 When will advertising be deemed deceptive?

- The product - The net quantity of the contents (and, if the number of servings is stated, the size of a serving) - Manufacturer - The packager or distributor

LO: 2 What information must be listed on the labels of food products?

Federal Food, Drug, and Cosmetic Act (LO: 3)

LO: 3 What law protects consumers against contaminated and misbranded foods and drugs?

The requirements of Regulation Z apply to any transaction involving an installment sales contract that calls for payment to be made in more than four installments. Ex: Installment loans, retail and installment sales, car loans, home-improvement loans, and certain real estate loans if the amount of financing is less that $ 25,000

LO: 4 What does Regulation Z require, and how does it relate to the Truth-in-Lending Act?

Fair Credit Reporting Act (FCRA) (: Protects consumers against inaccurate credit reporting and requires that lenders and other creditors report correct, relevant, and up-to-date information)

LO: 5 What federal statute is aimed at preventing inaccurate credit reporting?

"Cooling-Off" Laws

Laws that allow buyers to cancel door-to-door sales contracts within three business days

Counter advertising

Ne advertising that is undertaken to correct earlier false claims that were made about a product

Equal Credit Opportunity Act (ECOA)

Prohibits the denial of credit solely on the basis of race, religion, national origin, color, gender, marital status, or age

Fair Packaging and Labeling Act

Requires that food product levels identify: - Product - Net quantity of the contents (and, if the number of servings is stated, the size of a serving) - Manufacturer - The packager or distributor