Federal Consumer Protection Laws and Regulations
There are many federal consumer protection laws. This lesson will help you learn about a few of the laws that financial institutions must follow that protect your rights as a consumer.
Truth in Lending Act
The Truth in Lending Act (TILA) requires lenders to disclose the total cost of your loan, including the finance charge and the APR. In addition, it gives consumers the right to cancel certain types of home loans within three days. A Truth in Lending disclosure will include the APR, finance charge, amount financed, and total payment.
Vic is shopping for a credit card. He reviews the Truth in Lending disclosures for several different cards to find a card that doesn’t charge him an annual fee.
Truth in Savings Act
The Truth in Savings Act (TISA) helps you shop for the best account and select the right account for your needs. It requires financial institutions to disclose key terms of bank accounts clearly and in writing. Some of this information includes:
- What interest rate you earn
- How much money you have to deposit into the account to open it
- What fees you may be charged
Banks are required to give you this information if you ask them for it. The bank also must give it to you before you open an account.
The law also requires your bank to send you a statement on a regular basis that summarizes what happened in your account for that period. The statement will show you a record of when you made deposits into the account or took money out of the account. This statement helps you catch errors and keep up-to-date records of how much money is in your account.
Mary is shopping around for a new bank account at several banks. She asks each bank to provide her a copy of the Truth in Savings disclosure for the accounts. TISA guarantees Mary’s right to receive this written information.
Electronic Fund Transfer Act
The Electronic Fund Transfer Act (EFTA) establishes rights, liabilities, and responsibilities of:
- Customers who use electronic fund transfer services
- Banks that offer these services, which include the use of:
- Automated Teller Machines (ATMs)
- Debit cards
- Telephone or computer transactions
Theresa has been using her debit card to pay for groceries. One day while shopping, she could not find her debit card. Theresa immediately called her bank. If somebody else has used Theresa’s card, EFTA limits her liability for the purchases that the thief made without her authorization.
Expedited Funds Availability Act
The Expedited Funds Availability Act (EFAA) limits the amount of time a bank can hold a check deposited into your checking account. When you make a deposit, ask the bank how quickly the funds will be available for withdrawal.
Last month, Juan opened a checking account at his local bank. He went into the bank today to deposit his paycheck. EFAA helps ensure that he can use the funds from that check to withdraw money or write checks to pay bills within a short time after he made the deposit.