NARRATOR (00:00):
Welcome to module one on borrower's consumer rights. This module is part of the series helping clients explore their personal finance rights from the Consumer Financial Protection Bureau. This presentation is being made by a Consumer Financial Protection Bureau representative on behalf of the Bureau. It does not constitute legal interpretation, guidance, or advice of the Consumer Financial Protection Bureau. Any opinions or views stated by the presenter are the presenter's own and may not represent the Bureau's views.
NARRATOR (00:35):
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. CFPB FinEx is a place where financial educators, practitioners, counselors, researchers, and others can share information and best practices, learn from one another, advance their work, and see what CFPB is doing to help consumers.
NARRATOR (01:08):
Welcome to module one on consumer rights. This module is part of a series designed to help you as a practitioner help the clients you work with learn about their rights. After watching this module, check out the other three modules in the series to learn more. In module one, we will learn about consumer rights, consumer complaints, and the different laws that protect consumers. Partner with clients to help them spot credit discrimination, and explore additional resources to help you in your work.
NARRATOR (01:41):
All consumers have responsibilities, but they also have rights. Today, we will explore consumer rights related to credit. Throughout this module, we will include the title of sources you can explore to learn more or reference in the future. We know you all work in a variety of settings. Whether you work in housing or provide services to survivors of domestic violence, your role is essential. It is impossible to cover the variety of places and settings where you offer your skills. Today, we will use an example to help us learn. Let's meet David.
David (02:18):
Hi, I'm David. I'm a case manager at a multi-service agency that has a food bank on-site, offers adult education classes, mental health services, and has a housing program. Clients come to us with a variety of goals from getting new jobs, to moving, to improving their financial well-being. Each client goes through a goal setting curriculum. Clients often have questions about their personal finance rights. I want to learn more about consumer rights and how I can help clients when something goes wrong in the marketplace. Let's take a look at the CFPB's role in common consumer rights.
NARRATOR (02:56):
The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of consumer reporting companies. A person must be told if information in their file has been used against them. This means that anyone who uses a credit report or another type of consumer report to deny an application for credit, insurance, or employment, or to take another adverse action against a person must inform the person and must provide the name, address, and phone number of the agency that provided the information. A person has the right to know what is in their file and may request and obtain all the information about them in the files of a consumer reporting company.
NARRATOR (03:43):
This is called a file disclosure. And in many cases, these are free. A person is entitled to a free file disclosure if adverse action has been taken against them because of information in their credit report. They are the victim of identity theft and place a fraud alert in their file. Their file contains inaccurate information as a result of fraud. They are on public assistance and/or they are unemployed but expect to apply for employment within 60 days. In addition, all consumers are entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting companies.
NARRATOR (04:26):
A person has the right to ask for a credit score. A person may request a credit score from consumer reporting companies that create scores used in residential real property loans, but they will have to pay for it. In some mortgage transactions, a person will receive credit score information for free from the mortgage lender. A person has the right to dispute incomplete or inaccurate information. If a person identifies and reports such information to the consumer reporting agency, the agency must investigate unless it is considered a frivolous dispute. Consumers can also contact the furnisher of the information to correct or delete inaccurate, incomplete, or unverifiable information.
David (05:11):
It is great to know a person has the right to dispute incomplete or inaccurate information. That will be useful for clients to know.
NARRATOR (05:21):
Consumer reporting companies must correct or delete inaccurate, incomplete, or unverifiable information within 30 days. A consumer reporting company may continue to report information it has verified as accurate. In most cases, a consumer reporting agency may not report negative outdated information that is more than seven years old or bankruptcies that are more than 10 years old. Access to a person's file is limited. A consumer reporting company may provide information about a person only to people with a valid need, usually to consider an application with a creditor, insurer, employer, landlord, or other business.
NARRATOR (06:03):
The FCRA specifies those with a valid need for access. A person must give consent for reports to be provided to employers. A consumer reporting company may not give out information about a person to their employer or a potential employer without their written consent. There are some exceptions. For example, written consent generally is not required in the trucking industry. A person may limit prescreened offers of credit and insurance. Unsolicited prescreened offers for credit and insurance must include a toll-free number a person can call if they choose to remove their name and address form from the lists these offers are based on. A person may opt out with the nationwide credit bureaus at 1-888-5-OPTOUT, 1-888-567-8688.
David (06:59):
I can remind clients that credit reporting companies must correct or delete inaccurate, incomplete, or unverifiable information. I will work with clients who need assistance getting information corrected or removed.
NARRATOR (07:13):
You may be able to seek damages from violators. If a consumer reporting agency, or in some cases a user of consumer reports or a furnisher of information to a consumer reporting agency violates the FCRA, a person may be able to sue in state or federal court. Identity theft victims and active duty military personnel have additional rights. Visit consumerfinance.gov to learn more. For nationwide credit reporting companies, an additional right applies. Consumers have the right to place a security freeze on their credit report. The security freeze is designed to prevent credit loans and services from being approved in a person's name without their consent. Initial and extended fraud alerts are other options consumers may want to explore.
NARRATOR (08:06):
Knowledge check. Consumer reporting companies must correct or delete the inaccurate, incomplete, or unverifiable information that you dispute. True or false? If you answered true, you are correct. The Fair Credit Reporting Act requires consumer reporting companies to correct or delete inaccurate, incomplete, or unverifiable information that you dispute within 30 days. A consumer reporting company may continue to report information it has verified as accurate.
David (08:41):
That was a lot of great information. I'm going to print copies of a summary of your rights under the Fair Credit Reporting Act and leave them in the waiting room. I can also discuss the resource with clients when they are working on getting an apartment, loan, or other goals where information from credit reporting companies might be used. In the meantime, I'm working with a client who needs to get a car. They asked me how much interest they will pay and about the fees associated with their loan. I remember learning about the Truth-in-Lending Act, but I need to find out more to share accurate information. When clients have a question, I use the CFPB website to find accurate information. I just searched for the Truth-in-Lending Act.
NARRATOR (09:26):
The Truth-in-Lending Act or TILA requires that borrowers receive written disclosures about important terms of credit before they're legally bound to pay the loan. TILA empowers consumers to understand the true cost of credit and gives them an important opportunity to shop around before taking out credit. The most important terms of a loan are the annual percentage rate, APR. This is the cost of credit expressed as a yearly percentage. The finance charge, this is the cost of credit expressed as a dollar amount. It includes the amount of interest and certain fees a person will pay over the life of the loan if they make every payment when it is due. The amount financed, this is the dollar amount of credit being provided to the person.
NARRATOR (10:15):
And the total of payments, this is the sum of all the payments that the person will have made at the end of the loan. This includes the principal or the amount borrowed and all the finance charges and interest. The TILA disclosure will also include other important terms like if there is a prepayment penalty. It is important to review the TILA carefully before signing any loan contracts. Knowledge check. Borrowers must receive written disclosures before they're bound to pay a loan. True or false? If you said true, you are correct. The Truth in Lending Act requires lenders to provide the TILA disclosure before they're bound to pay the loan. The TILA disclosure is often provided as part of the loan contract.
David (11:05):
That is the exact information I needed. I spoke to the client and they did get a TILA disclosure with their loan agreement. They were able to locate all the fees associated with their loan and successfully purchased their car. While that's exciting, another client have their application for a credit card denied. They don't understand why. I know consumers are supposed to be informed of why an application was rejected. Let's learn more about the Equal Credit Opportunity Act.
NARRATOR (11:35):
The Equal Credit Opportunity Act (ECOA) is a Federal civil rights law that protects consumers from being discriminated against by lenders based on certain protected characteristics such as race, color, religion, national origin, sex, including sexual orientation and gender identity, marital status, age, receiving money from public assistance, or exercising rights under the Consumer Credit Protection Act in good faith. The ECOA applies to loans and credit including car loans, credit cards, home loans, student loans, business loans, and personal loans. There are additional laws that may protect a person in other situations.
David (12:22):
Unfortunately, sometimes clients may be denied credit because of discrimination. The Equal Credit Opportunity Act makes it illegal for a creditor to discriminate in any aspect of a credit transaction based on the protected characteristics mentioned earlier. The Fair Housing Act also makes many discriminatory practices in home financing illegal.
NARRATOR (12:47):
Under the Equal Credit Opportunity Act (ECOA) it is illegal to refuse a person credit if they qualify for it, discourage a person from applying for credit, offer a person credit on terms that are less favorable than terms offered to someone with similar qualifications, for example, offering someone a higher interest rate, or close a person's account on the basis of a person's race, color, religion, national origin, sex, including sexual orientation and gender identity, marital status, age, receiving money from public assistance, or exercising rights under the Consumer Credit Protection Act in good faith.
David (13:29):
I am going to review what lenders can't do so I can be ready to partner with clients if issues come up. Let's take a look.
NARRATOR (13:37):
Lenders can't reject a credit application or change the credit terms or conditions based on a consumer's protected characteristic. Ask if the consumer receives alimony, child support, or separate maintenance payments except in specific circumstances. Ask if the consumer is widowed or divorced. Ask for information about a consumer's spouse like the spouse's income except in specific circumstances. Treat a consumer differently based on age. Refuse to consider public assistance income the same way as other income, or treat consumers less favorably because of sex, sexual orientation, or gender identity.
NARRATOR (14:19):
Problems with financial products and services sometimes happen. And often, they can be fixed if the client works directly with the company. Even if they later submit a complaint to the CFPB or hire a lawyer, it can help if the consumer takes the first steps. Most companies can be reached by telephone, email, online chat, mail, or social media. Here's some tips that can help. Never post personal data on social media or review sites. Avoid angry, sarcastic, or threatening language, and keep notes of who responded, when and what they said. Before a client contacts the company, they should be prepared and have this information on hand: name, address, phone number, and account or transaction number, a description of what happened, how they want to fix the problem, and documents or screenshots that show what happened.
David (15:17):
I can work with clients when they need to resolve a dispute. For example, I can help them prepare to contact companies when a financial problem comes up. I am going to give clients copies of the CFPB's handout, Helping Consumers Spot Credit Discrimination, as seen here. Now that we know what lenders can't do, let's look at some red flags consumers might come across. Credit discrimination is often hidden or even unintentional, which makes it hard to spot.
David (15:46):
I learned that there are red flags a person can look for such as being treated differently in person than on the phone or online; being discouraged from applying for credi;, being encouraged or told to apply for a type of loan that has less favorable terms such as a higher interest rate; hearing the lender making negative comments about race, national origin, age, sex, including sexual orientation or gender identity or other protected statuses; being refused credit even though the person qualifies for it based on advertised requirements; and being offered credit with a higher rate than the person applied for even though they qualify for a lower rate based on advertised requirements. I know sometimes clients will need help when they believe they have been discriminated against. Let's explore resources that can help.
NARRATOR (16:39):
A person can find a legal resources list by state at lawhelp.org, find out about eligibility for assistance from a Legal Services program funded by the Legal Services Corporation at lsc.gov/what-legal-aid/find-legal-aid, or they can locate their state attorney general's office at naag.org/find-my-ag/.
David (17:10):
I can help clients if they need assistance navigating these resources.
NARRATOR (17:15):
On consumerfinance.gov, look for information you need to help clients explore their personal finance rights. Our slides featured a variety of resources. Use the links on the screen to visit those sources. To continue to learn more, join the CFPB FinEx community. You'll receive updates by email. And engage with a large network of practitioners. You can also access the LinkedIn discussion group for news, research, and best practices. Plus, stay up to date with webinars, regional meetings, and conferences all while meeting CFPB presenters who can work with your organization. Use the link to join today. Thank you for joining us as we explored consumer rights. Module two is up next. Join us as we finish discussing consumer rights related to credit and we explore housing rights.

2