5 Laws Every Consumer Should Know
When you default on a debt, your creditor will often sell that debt to a third-party debt collection agency. That used to mean you were in for constant phone calls at any time of the day or night, threats of lawsuits, and even threats of violence. Now, the Fair Debt Collection Practices Act stands between these debt collectors and you. The FDCPA is a powerful consumer protection law aimed at preventing such abusive debt collection practices. The FDCPA applies to collection of your personal debts – mortgages, credit cards, car loans, and more. Business-related debts do not fall under the FDCPA. It applies to third-party debt collectors and collection attorneys, although your original creditor may still contact you about your debt. This rule limits when and how collectors may contact you, defines what they have to tell you about your debt, and prevents them from engaging in certain collection tactics at all.
Under the FDCPA, debt collectors may not call you at an inconvenient time. That means they can’t call early in the morning or late at night. If you ask collectors (either orally or in writing) not to contact you at work, they must respect your request. Debt collectors may only discuss your debt with you, your spouse, and your attorney. They may contact third parties to learn your address, phone number, and place of employment, but they usually can’t contact those people more than once. Debt collectors must send you a written notice of how much you owe and to whom with instructions for whom to contact and how to proceed if you believe they’re contacting you in error. If you believe you don’t owe the money, you must inform the collector within 30 days.
The FDCPA forbids debt collectors from harassing or threatening you or any third parties. They may not threaten violence, use obscene language, or call you repeatedly. They also may not falsely claim to be attorneys, falsely claim that you will be arrested, or try to collect any interest or fees beyond what you actually owe. If you want the debt collectors to stop contacting you altogether, you can tell them in writing and they are required by law to stop. They still have the right to sue you for collection, but they won’t be able to contact you otherwise.
Make sure you keep records of all contact with debt collectors. Send written communication such as faxes and letters whenever possible and keep copies of everything you send. Record your phone conversations with debt collectors or, at a minimum, note the time and content of each call. If you have unsuccessfully requested that debt collectors stop contacting you or if you feel they are harassing you or threatening you, take your records and talk to an attorney. If debt collectors violate the FDCPA, you have the right to sue for damages and attorney’s fees.
Nobody really likes to hear from door-to-door salesman, but sometimes they can be hard to turn away. They may even get you to buy a year’s subscription to “Turf Care Weekly” or a 31-piece Carpet Cleaning Wizard. Of course, the moment they leave, you probably regret your decision. If you’ve purchased something that cost more than $25 in your home and you want to return it, you have the right to do so within 3 days under the Cooling-Off Rule.
The Cooling-Off Rule applies to sellers who come to your home or sellers in a temporary place of business, such as a convention center or fairground. If you decide to cancel a purchase, you have to notify the seller in writing postmarked before midnight on the third business day after you made the purchase. You may deliver it by hand or request a return receipt so you know the seller got your letter. At the time of the sale, the seller should provide you with two copies of a cancellation form and inform you of your right to cancel your purchase. You should keep one cancellation form for your records and send the other to the seller. If you don’t get cancellation forms, you can write your own cancellation letter.
After receiving your cancellation request, the seller has 10 days to refund your money. Within 20 days, the seller must pick up the product or reimburse the mailing costs for the return. You do have to return what you bought in good condition – if you’ve damaged it then you’re bound by the sale.
The Cooling-Off Rule does not apply to the sale of arts and crafts sold at locations such as fairs, shopping malls, or civic centers. It also doesn’t apply to the purchase of cars or real estate. Sales conducted entirely through the mail or by telephone are not covered, nor are products you purchased for emergency use. It does, however, cover sales even if you invited the salesperson into your home, whether spontaneously or for an event.
If you’ve ever applied for an apartment rental, insurance, or any kind of loan, you know how important your credit report is. Your credit report contains your financial information, your address and contact information, and your arrest record. Credit reporting agencies collect this information and sell it to banks, insurance agencies, and other organizations that want to know your credit history.
You should check your credit report regularly to make sure that all the information is correct. Your credit report may also show signs of identity theft, such as credit cards opened in your name and left unpaid. That report affects your ability to get loans, purchase cars, and find employment. You’ve probably seen plenty of offers for “free” copies of your credit report, but they’re usually attached to a very un-free credit card or other service. You don’t have to do that.
Under the Fair Credit Reporting Act, you’re entitled to one free copy of your credit report every year from each of the three national credit reporting companies: Equifax, Experian, and TransUnion. You should take advantage of that rule and check out your credit report. If you find an error, report it to the credit reporting company in writing. They have to investigate the error within 30 days and provide you a copy of your updated credit report (that won’t count as your annual free copy). Stay on top of your finances and keep your credit record squeaky clean to keep your borrowing costs low and make sure your insurance, rental, and loan applications don’t get tossed in the trash.
Do you pay your bills online? Are your paychecks directly deposited into your account? Do you have a debit or ATM card? If the answer to any of those is yes, you should know about the EFT Act. Debit cards and electronic checks are different from credit cards and the rules governing their use are different, too.
If you find an error on your bank statement, you have 60 days from the time the statement was sent to notify your financial institution in writing of the error. The institution must investigate the error within 10 days, share the results of its investigation within 3 days of finishing it, and correct any errors within the next business day after that. If you miss the 60-day deadline, they don’t have to investigate at all and you may be entirely out of luck.
If you have a credit card, your losses for fraudulent or unauthorized purchases are limited to $50 by federal law. Under the EFT Act, you must report a lost or stolen debit card to your financial institution within 2 business days of realizing it’s missing. If you do, your loss will be limited to $50. If you report it after more than 2 days but less than 60, your loss will be limited to $500. If you report it after more than 60 days, you’re liable for whatever charges show up, no matter the amount. So, keep track of your debit and ATM cards and act quickly if one goes missing.
You’ve probably heard horror stories of car dealerships voiding warranties when people get work done by outside mechanics. However, an outside mechanic is often significantly less expensive than the dealership, especially for routine maintenance. The Magnuson-Moss Warranty Act addresses these concerns. Dealerships may not void your warranty if an outside mechanic or even you yourself do routine maintenance on your car. If you or the mechanic makes an error that causes damage to the car, then the dealership is not responsible for fixing that damage. However, the warranty will still be in place for the rest of the car.
The Magnuson-Moss Warranty Act also protects your warranty if you use recycled or aftermarket parts. As with outside mechanics, if the aftermarket part causes damage, the dealership may refuse to fix that damage. The warranty still applies to the rest of the car.
So, familiarize yourself with the terms of your vehicle’s warranty and keep all of your records about servicing and maintenance. If you think your warranty claim has been wrongly denied, you should contact your state’s Attorney General or the FTC.