Federal Consumer Laws and Credit Agencies – How the Educated Consumer Can Benefit


There are a group of federal statutes that provide a broad range of important protections for consumers against harmful lending practices. These statutes include the Fair Credit Reporting Act (15 USC 1681), the Consumer Credit Protection Act (15 USC 1671), the Fair Debt Collection Practices Act (15 USC 1692), the Truth in Lending Act (15 USC 1601), and the Fair Credit Billing Act (15 USC 1666). These laws are designed to protect consumers against abuses by creditors and credit agencies that can have a devastating effect upon people’s credit scores, can impede their ability to pursue employment, and can keep them in debt.

The educated consumer should know how to take advantage of federal laws designed to protect against abuses by creditors and credit agencies. With proper documentation that is easy to prepare, the consumer can often force creditors and credit agencies to correct errors or to pay significant damages through a lawsuit

To benefit from this protection the consumer needs to understand the basic rights granted by each statute and to know how to use them to advantage. If the reader is concerned with the specific application of a statute to the particular facts of his case, he should seek legal advice from a lawyer in his state. This article focuses on the rights established under the Fair Credit Reporting Act.


In 1968 Congress passed the Fair Credit Reporting Act (the FCRA) to protect consumers against unfair credit reporting. Congress said:

“Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers…There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.”

People are frustrated as well as financially damaged when they try to correct errors in their credit reports and the credit agencies ignore them. You can minimize these frustrations by taking common sense steps that will convince or, if necessary, force the credit agency to act. The threat, or even hint, of a properly documented legal action will often break the logjam. The threat becomes even more effective if an attorney becomes involved, and the statute provides ways you can obtain the services of an attorney at little or no cost to the consumer.

Lawsuits Under The FCRA

To win a civil case, a plaintiff must establish both liability and damages. If a plaintiff proves that the defendant has violated a legal duty (liability), he is then entitled to the damages allowed under law that he can prove. Consumers can sue for violations of the FCRA in either federal or state court, and the FCRA gives the consumer powerful legal tools to pursue his case. These tools give the educated consumer powerful leverage to convince or compel credit agencies to correct errors in their reports.

Summary Of The Fair Credit Reporting Act

The FCRA consists of numerous lengthy sections that are written in technical and often confusing language. Some provisions apply to limited circumstances while others have a broad application. We will discuss the most important provisions including compliance procedures and civil penalties.

The statute defines “consumer” as an individual, which means that FCRA does not protect corporations, partnerships or other business organization. It applies only when a “consumer report” is involved. A “consumer report” is any communication of information that can be used to evaluate credit or to determine qualifications for employment, insurance underwriting, governmental license, legitimate business transactions that are initiated by the consumer, and other specific uses such as concerning national security investigations. There are specific restrictions on the use of medical information and limited disclosure of information permitted to governmental agencies. The consumer must consent before a prospective employer can review his report.

Only certain information can appear in a consumer report. Bankruptcies more than 10 years old and other adverse information except for records of convictions of crimes more than 7 years old must be removed. The counting period starts 6 months after an action has been taken on a delinquent account.

There are provisions against identity theft and a notice provision if an investigative consumer report is being prepared about the consumer. The consumer is entitled to certain information appearing in his report.

If the user of a credit report takes adverse action based on the report, he is obligated to provide the consumer with the name of the credit agency furnishing the report and other information. It is also a violation to obtain a consumer credit report under false pretenses.

Compliance Procedures

The key provision of the FCRA is section 1681e. entitled “Compliance procedures.” This section establishes the principal obligations of consumer reporting agencies. Each agency “shall maintain reasonable procedures designed to avoid violations” regarding the inclusion of forbidden information and “to limit the furnishing of consumer reports” to permitted purposes. Paragraph (b) is probably the most significant provision in the entire FCRA:

“Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” (Emphasis added).

Section 1681i. extends the compliance provision by obligating the credit agency to conduct a reinvestigation of disputed information when a consumer notifies the credit agency of a dispute. The agency must also inform the consumer of the result of its investigation. The compliance requirement has important practical applications which are discussed below.

Courts have held that “reasonable procedures” are procedures that a prudent person acting as a credit reporting agency would follow under the circumstances.. Agencies have been held liable where the consumer complained about inaccurate reports and the agency failed to investigate. (Remember this point – it is important.) Agencies have also been found liable where they failed to report that an item was disputed. If there is an inaccuracy that is not brought to the agency’s attention, the question is whether the danger of harm to the consumer warrants the effort needed to detect and avoid the inaccuracy. The consumer can also establish lack of reasonable procedures by demonstrating reasonable alternative procedures that would have prevented the inaccuracy. The consumer can prove his case without discussing the specific procedures employed by a credit agency. These are all questions of fact, and the educated consumer can do a great deal to establish the facts that he needs to win.

Damages for Willful and Negligent Noncompliance

This section imposes liability on any “person” violating the FCRA. This includes both credit agencies and users of credit reports. Once the consumer has established a violation of the FCRA, he is entitled to damages. Section 1681n and 1681o make the FCRA a powerful enforcement tool for the consumer. Section 1681n describes the civil liability of credit agencies for “willful noncompliance.” The consumer in that case is entitled to actual damages, damages specifically allowed by statute which range from $100 to $1000, punitive damages, costs, and reasonable attorney’s fees. Section 1681o addresses civil liability for “negligent noncompliance” which entitles the consumer to actual damages, costs, and reasonable attorney’s fees.

The consumer is entitled to actual damages, costs and attorney’s fees for both willful and negligent noncompliance. Actual damages have been interpreted to be inclusive of almost any negative consequence. They include out of pocket expenses, injury to creditworthiness, loss of reputation, embarrassment and humiliation, and mental and emotional distress. In one case a plaintiff was awarded $50,000 for worry, stress, anxiety, loss of sleep and expenses of litigation. Costs are actual out of pocket expenditures for the litigation as well as statutory costs. Attorney’s fees are calculated on the basis of the attorney’s hourly rate and may be awarded where there is a successful outcome.

If the plaintiff proves that the noncompliance was willful, he or she is also entitled to statutory damages of $100 to $1,000 and punitive damages. To show willful noncompliance, which imposes a higher legal burden, the plaintiff must show that the defendant knowingly and intentionally committed the act in conscious disregard of the rights of others. Some decisions have also included “reckless disregard” of the rights of the consumer. The plaintiff does not have to show malice or evil motive. Courts have held that there was a sufficient showing of willfulness where a company knowingly included false information in a credit report; where a user of a credit report failed to properly identify a consumer reporting agency in a letter denying credit; and where a credit agency repeatedly sent meaningless form letters in order to wear out the consumer. Someone was held to have acted recklessly where he did not independently analyze a dispute. There are many cases where the claim of willfulness was rejected.

Factors in determining the amount of punitive damages to be awarded include the purpose of the FCRA, the harm to the consumer, the manner in which defendant conducted its business, and defendant’s income and net worth. The plaintiff does not have to prove actual damages in order to get punitive damages.

There are also criminal penalties for obtaining information under false pretenses or knowingly giving information to an unauthorized individual. In such cases the violator can be fined or imprisoned for not more than 2 years. Additionally, the FCRA can be enforced by the Federal Trade Commission and other federal and state agencies with a civil penalty not more than $2,500.

Practical Suggestions

The FCRA applies when the consumer discovers an error in his or her credit report, which unfortunately happens more frequently than expected. The consumer can greatly increase his chances of obtaining a quick and favorable response from the credit agency by following certain common sense procedures. In the event that the agency still does not correct the problem, the work done by the consumer will be useful if a lawsuit becomes necessary.

As we have noted, cases have found a credit agency in violation of the FCRA when the consumer notifies the credit agency of the error and the credit agency does nothing. As common sense suggests, the stronger the documentation establishing these facts, the harder it will be for the credit agency to avoid liability. This translates into a practical course of action. The consumer must give adequate notice of his claim to the credit agency.

A critical point to understand is that it is not enough to give the credit agency notice of a complaint; the consumer must be able to prove that the credit agency actually received the notice. To do this the consumer should send the notice by Federal Express, UPS or similar carrier that records delivery. In some instances an email with an acknowledgment of receipt will be sufficient. Not only will the consumer then have proof of delivery, but the credit agency will know that the consumer has that proof and may be more likely to respond.

The next question is what information should the consumer send to the credit agency? The answer is documentation that will most strongly establish the validity of the consumer’s claim.

Example 1. Say, for example, that the credit agency has failed to note that an obligation has been fully paid. Often the consumer will call the creditor, ask him to send a letter to the credit agency, and wait. If nothing happens, it may because the creditor failed to send the letter, because the letter did not reach the credit agency, because the letter gave incomplete information, or because the credit agency failed to act. There is no way to determine what happened, so the consumer has no basis for a claim against the credit company.

Compare this with a more effective proactive approach. Assume the consumer himself obtains a written letter by the creditor that full payment was made on a stated date and the consumer sends that letter with his own written request that his account be corrected . This letter is delivered to the credit agency by Federal Express or UPS. If the credit agency ignores this information, how can it then claim that it is following reasonable procedures? And if a credit agency cannot show it followed reasonable procedures, then it has violated the FCRA.

Example 2. Let’s take a more complex case. Suppose that the consumer validly cancels a purchase order but the creditor erroneously reports it as unpaid. If the creditor issues a letter admitting its error, that should be sufficient. But what happens if the creditor simply doesn’t cooperate? What documentation would convince an objective person knowing nothing about the case that the consumer did in fact cancel the transaction and that the debt was erroneously reported?

The first thing needed is proof of the cancellation. The best proof would be documentation from the consumer to the creditor expressly stating that he was cancelling the order and saying why he was entitled to cancel the order. The letters, which must always be dated, should be written to fit the particular facts of the situation. Most important, the letters should be short, direct, and blunt. They must specifically say what has happened and never consist of vague hints or suggestions. Depending on the facts, the letters could read as follows.


Dear Mr. Creditor:

Please be advised that I am cancelling order no. xxxx as is authorized by paragraph 7 of your purchase order. Please mark your records that the order has been cancelled.

Very truly yours,


Another scenario might be:


Dear Mr. Creditor:

I am confirming my conversation with Joe Smith of your office that I have cancelled purchase order no. xxx. Please mark your records that the order has been cancelled.

Very truly yours,


This means that the educated consumer should know that when he cancels or makes an important change to an order, he must immediately document the cancellation or change in writing with date included and deliver that writing to the creditor by Federal Express, UPS or email with receipt requested.

The next thing needed is documentation showing that the creditor acknowledged the cancellation, either expressly or by the fact that he did not deliver the product. Again, written acknowledgment of the cancellation would suffice. If the creditor does not cooperate, the consumer can submit an affidavit (a written statement that is sworn to be true and signed and stamped by a notary public) stating that the creditor accepted the cancellation and did not deliver the goods. Since the product was never delivered, the creditor has no way to rebut this documentation.

The consumer should then write a letter to the credit agency expressly setting forth the facts.


Dear Credit Agency

I am writing to notify you that charge no. 1234 on my credit report is in error. On [date] I cancelled the order, and the creditor accepted the cancellation and never delivered the products. The cancellation is established by my letter to creditor dated [date] which is annexed and the acceptance and non-delivery of goods is established by my annexed affidavit.

Please either correct my credit report immediately to reflect this information or investigate this request immediately and advise me within 30 days of your findings.

Very truly yours,


Let’s say that the after receiving the cancellation letter and the affidavit from the consumer, the credit agency does nothing. The agency would be in violation of the FCRA. The practical effect of this documentation is that the credit agency probably would follow the path of least resistance and either correct the report immediately or investigate and then correct the report. The consumer gets the results he wants, first because he took the initiative and got the necessary documentation, and second because he sent the documentation to the credit company in a way that lets him prove receipt.

Getting An Attorney The FCRA allows a consumer to be reimbursed for his or her attorney’s fees when the consumer prevails in a lawsuit. By having relevant, concrete documentation as we discussed above, the consumer himself establishes what is probably a winning case. (As any honest attorney will agree, there are never any guarantees.) The consumer should be able to find an attorney to represent him if a litigation against a credit agency becomes necessary and he has already established a strong case. As part of the representation, the attorney probably will first write a demand letter to the credit agency, and that letter in and of itself may be sufficient to get the desired result.


The FCRA empowers the educated consumer to protect his rights with credit reporting agencies. Effective use of these rights can be of substantial benefit to the financial health and welfare of the consumer.

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Discover The Tips That Can Lead You To A Prosperous Affiliate Marketing Strategy

If it’s affiliate marketing that you want to learn about then you have come to the right place. When it comes to affiliate marketing it’s sometimes the little tips that you know that contributes to your success. Experts and newcomers alike can appreciate any and all tips that come there way, so dive in and digest these useful tips.When selecting an affiliate marketing program, look for a company that offers a unique product. If you are just one person in a sea of reviews for the same product, you are less likely to have a high number of buyers. Promoting a product that is unlike anything else on the market and is not being promoted by many others will have a higher rate of success.Use content marketing to sell affiliate products. Most people will not buy a product through an affiliate link without any prior information about the product or what it can do for them. To increase future sales send potential customers to an authority website where you regularly provide helpful advice related to the niche your affiliate product falls into. Include your affiliate link on the site.When looking for payout from an affiliate marketing program, remember that many companies will hold on to your money for quite some time after a sale. In many cases, you have to meet a lower threshold before you are allowed to withdraw your commission. In other cases, the parent company may hold your money until after they ship the product, to ensure the order isn’t cancelled or returned. Don’t expect instant payout on a sale.Developing and keeping a list of ideas handy is a great way to achieve in affiliate marketing. Once you learn a great tip or have one of those proverbial light bulb moments, always remember to make a note of it so you can refer to it later on. As you progress in your note-keeping, you can begin to form campaigns from loose ideas.Using text services can help you earn profits. Although this is a new service, many affiliates are already using it to communicate with customers as well as promote new affiliate offers and products.Affiliates with blogs should be keeping their readers informed at all times. Blogs by nature have regularly updated content, and thus they receive recurring visitors. Create a resource page for your visitors so that they can easily check and find old content if they are interested in knowing more.While using affiliate marketing, remember that you want Internet users to trust in you. If you use an ad for a product or company that you don’t have faith in, your customers will not have faith in it (or you) either. Too many ads, or ads that are not relevant to your content, will seem suspicious, and visitors will end up not trusting what you have to say.Add content that your readers want along with your affiliate links. If you provide reasons for your audience to click on your links, you will find much better success. If you just type a list of baby items you like with links, you’ll receive much less response than if you type reviews and why you loved these items.Nothing destroys a visitor’s opinion of a website owner faster than a concealed advertisement. This does not mean that it is impossible to satisfy visitors and engage in affiliate marketing; the honest webmaster is simply honest and transparent about it. Visitors should always be made aware when a website gets money for endorsing a particular product. They rarely resent a straightforward advertisement as they do a duplicitous one.The best way to use affiliate marketing is to know your audience. You need to ask yourself why people are coming to your site, and what it is they want. Once you know that, you will be more successful because you will be able to give people what they are looking for.If you are going to make cash through the affiliate marketing industry, it is important that you know who your audience is. If your website is about to trumpet mouthpieces then you probably will not make very much profit by advertising for vacuum cleaners because your audience is not in the market for a new vacuum.It is important to always disclose your affiliates right from the start. This will give your readers a sense of who you are and what you are about. They will also not feel surprised or manipulated when they see the advertisements from those companies, and you may end up bringing more business to those companies.Trying different affiliate programs to find which one works best for you is okay. You have to find one that meets your needs with a payment plan that works best for you. You should also check other affiliate vendors to see if there are others that meet your needs more.A great affiliate marketing tip is to make sure the vendor you’re working with doesn’t use tricks on their sales page to cheat you out of your commission. Sometimes companies will offer the visitor different options in terms of payment, and by selecting those options, you won’t receive any commission.To increase the success of your affiliate marketing, evaluate the marketing platform of a potential affiliate company before you decide to advertise their products. If the quality of the company’s marketing is poor, you will not be likely to receive worthwhile profits from promoting their items. If you are not impressed, your visitors will not be either.Make sure the affiliate program you choose provides you with tools to make selling easy. They should already have an array of graphics that they know drive sales, and text links which work. They should even have letters you can use via email or text snippets you can post on Twitter and Facebook. If they don’t, you should pass.Experiment with a variety of different affiliate marketing programs, rather than just sticking with one. Different programs have different drawbacks and bonuses – for instance in the way they pay out, or the percentage of commission. Working with different vendors means that you will still have an income even if sales through any one vendor slows down. It’s worth taking the time to find a spread of vendors whose products and program you feel enthusiastic about.Using the product that you are interested in selling before becoming an affiliate marketer can be an invaluable experience. The experience of using the product will also give you ideas on how to market the product’s usefulness, particularly, what areas the product performs well in. It will also help you to identify whether it is a high-quality product or a product that is not worth selling. If the product is not worth selling, don’t waste your time with that company. Many companies also offer a free trial period for their products, so make sure you take advantage of it when available.Do not forget that affiliate marketing expands further than the Internet. You do not have to convert someone online. You may find a product that allows you to pitch by phone or by snail mail. This is a great way to increase your profits and profile as an affiliate. Just be sure that you’re ready to handle the work.Remember, the more you learn about affiliate marketing the more potential success you can achieve. You can use and apply the tips you learned from this article to other tips you have learned throughout your affiliate marketing endeavors.

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Payday Loans and Installment Loans – Which Is Better?

Before deciding which type of loan is better, one must take into account the situation. Both payday and installment loans for poor credit can be beneficial in different ways, despite recent criticism from advocates for consumers. There are those that are beneficial and legit, and others that have the effect of dragging consumers into a cycling of owed debt.Payday loans as well as installment loans are often referred to as small-dollar and high-cost loans. This is because they usually carry high interest. That’s because the borrowers are usually low-income, or carry poor credit to no credit. Hence, they are considered subprime borrowers and usually don’t have access to cheaper credit options like credit cards or home equity lines of credit via institutions like credit unions and banks.Here are some of the differences between payday loans and installment loans so that a potential borrower can make an informed decision.Payday LoansPayday loans are those that can be anywhere from a hundred dollars to fifteen hundred. They are meant to be short-term and paid back in 30 days or even less. Typically, the pay back is due on the upcoming payday. This is where things get tricky for the consumer as they find themselves short on the next payday, then the next. It’s best to only use this type of loan if extra funds are coming in.The loan is usually set up by post-dating a check or by automatic withdrawal after the borrower’s paycheck has been deposited into the account used to secure the loan. There is a fee charged, and it’s usually a very high percentage so it’s best they be ready. Further, the loan is unsecured and the lender will take into consideration the borrower’s ability to repay before approving.If for some reason the borrower can’t pay back the loan will have more fees tacked on and it will be owed in another 2 to 4 weeks.Installment Loans for Poor CreditInstallment loans for poor credit $150 to thousands of dollars. They carry principal, interest and finance charges to include insurance and fees. All of it is repaid in monthly installments that are fixed and set over a set amount of months. The APR is higher than that listed on the contract usually because of the various types of credit insurance, so that’s something to pay attention to.Another important note on installment loans for poor credit is that they can be renewed in as little time as every few months with new interest charges, credit insurance and fees. In most cases, the loan amount will reset to the first amount borrowed, and sometimes it’s increased. To secure the loan one will need to use property such as a car, electronic device, firearm, jewelry or other higher priced items. Real estate can’t be used as collateral in installment loans for poor credit.Using this information, anyone that is looking to decide between either a payday loan or an installment loan for poor credit can make a better decision based on what they need and what they can work with. Both options can work when one is strict with repayment and keeps on top of the terms. It does take a lot of discipline, especially with a payday loan or one may find themselves in that endless cycle of borrowing and repaying.For those with poor credit, it is a great option and can completely satisfy the immediate need for cash should that circumstance arise. As with any agreement involving money, reading and analyzing the fine print and using a well-known lender is a smart move.

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