Reforming Credit Laws Essay

Reforming Credit Laws Essay

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Credit allows consumers to finance transactions without having to pay the full cost of the merchandise at the time of the purchase. A common form of consumer credit is a credit card account issued by a financial institution. Merchants may also provide financing for products which they sell. Banks may directly finance purchases through loans and mortgages. Consumers imperatively rely on credit, so it is necessary that credit laws help protect the consumer. I will discuss some of the major credit laws that impact the consumer, examine whether these laws are working, and talk about possible changes that might be needed to make sure the consumer is rightly protected.

The law of consumer credit is primarily embodied in federal and state statutory laws. These laws protect consumers and provide guidelines for the credit industry. States have passed various statutes regulating consumer credit. In order to understand how consumer credit is litigated, it is also important to know who oversees its regulations. The Federal Trade Commission (FTC) is an incredible agency that deals with issues that deal with both consumer protection and competition jurisdiction in broad sectors of the economy. When the FTC was created in 1914, its purpose was to prevent unfair methods of competition in commerce. Over the years, Congress passed additional laws giving the agency greater authority to police anticompetitive practices. The following quote from the FTC website gives a little history of the agency:

In 1938, Congress passed the Wheeler-Lea Amendment, which included a broad prohibition against ‘unfair and deceptive acts or practices.’ Since then, the Commission also has been directed to administer a wide variety of other consumer protection laws,...

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...Library, Parkville, MO. 25 September 2007.

Bloch, Jeff and Michael McLain. “Reg Z Changes Raise Concerns.” Credit Union Magazine. Vol. 73, Iss. 9 (Sep 2007): 68-69. ProQuest. Park University Library, Parkville, MO. 25 September 2007.

Goldwasser, Joan. “Credit Report Crackdown.” Kiplinger’s Personal Finance. Vol. 59, No. 11 (November 2005): 118. LexisNexis. Park University Library, Parkville, MO. 25 September 2007.

Willman, John. “Shake-up of credit rights to protect borrower.” Financial Times. London edition 1 (7 April 2007): National News 4. LexisNexis. Park University Library, Parkville, MO. 25 September 2007.

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