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Consumer Law Definition
Consumer protection law is the body of laws designed to ensure the rights of consumers, competitive and fair trade, and truthful information in the marketplace. For many financial institutions, including banks, insurance companies, and other businesses, this ever-changing and intricate web of federal and state legislation and regulation often proves a challenging area of the law.
One of the most significant developments in consumer protection law is the adoption of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). The Dodd-Frank Act, enacted in response to financial crisis of 2008, established the Consumer Financial Protection Bureau (“CFPB”), which consolidated most Federal consumer protection authority in one governmental entity.
Although consumer protection covers a wide variety of areas, some of the central activities regulated and specific laws include:
Making Consumer Loans:
Truth in Lending Act (“TILA”) - TILA requires disclosure of the terms of a loan and all costs.
Real Estate Settlement Procedures Act (“RESPA”) – RESPA prohibits kickbacks and requires lenders to give a good faith estimate of the cost of a loan.
Collection of Debt:
Fair Debt Collection Practices Act (“FDCPA”) – FDCPA is designed to eliminate abusive consumer collection practices. Many states have adopted versions of this federal regulation.
The Telephone Consumer Protection Act of 1991 (“TCPA”) – TCPA restricts telemarketing and limits the use of cell phones, SMS, text messages, auto dialing, prerecorded voice messages, and fax machines.
Reporting of Debt:
Fair Credit Reporting Act (“FCRA”) – FCRA regulates the collection, distribution, and use of a consumer’s credit information.
Use of Consumer’s Private Financial Information:
The Gramm-Leach-Bliley Act (“GLBA”) – puts limits on when financial institutions may share a consumer’s nonpublic private financial information.
Since the financial collapse of 2008, these consumer protection laws have taken on a heightened significance and consumer protection litigation now occupies a more substantial portion of the litigation landscape, a change that is likely here to stay. A cottage industry of firms specializing in these consumer protection laws has sprung up, particularly in conjunction with the organized strategy for defending the large numbers of mortgage foreclosures.
The most effective law firms representing financial institutions in this area of the law will have a comprehensive knowledge not just of the individual statutes but of how these consumer protection laws operate in concert with each other and other areas of the law such as foreclosure and bankruptcy. Because a single loan may be subject to regulation under each of these laws, an effective firm will be able to guide its clients through loan making, reporting, collection, and enforcement of secured debt.
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