Have you ever had a financial transaction handled in a way that made you think, That has to be illegal?
As many great companies as there are out there, there’s always a bad apple that can make you feel as though your rights have been violated. You might wonder how the company gets away with such practices, but without a law degree or financial expertise, you just can’t be sure.
Here’s how you can be sure next time. Read about the key laws below to learn concrete ways to understand if a company you’re dealing with is stepping over the line and breaking the law.
6 laws you need to know about that affect your finances
You can find the full text of the laws mentioned below online, but these brief summaries will walk you through what you need to know to protect yourself in the financial jungle.
1. Truth in Lending Act, a.k.a. ‘Regulation Z’
You might come across this act referred to by a few different nicknames, including the Truth in Lending Act (TILA) and Regulation Z. Its purpose is to help you see what you’re in for when taking on new credit.
The Consumer Financial Protection Bureau (CFPB) says Regulation Z enables you to easily compare credit offers by making all lenders use the same terminology and the same format when stating interest rates. Before the law, the agency says, “consumers were faced with a bewildering array of credit terms and rates.”
The act also serves to protect consumers from “inaccurate and unfair credit billing and credit card practices,” among many other things. Here’s what the founding partner of Wealth Management Group, Craig Bolanos, has to say about it:
“The Truth in Lending Act is mission critical for consumers of loans, as it provides a platform for fair comparison across multiple offers. Essentially, TILA provides a consumer with the real information they need, such as the total cost of borrowing. Hence, it cuts through the red tape of marketing ploys etc., because we all know the devil can be in the details.”
But this act isn’t just about seeing the information you need to know. It’s also about helping you understand what that information means to your pocketbook.
As attorney and Bentley University professor Steven J.J. Weisman explains: “The most important aspect of this law is the required written disclosure of all the finance charges when someone borrows money. … The finance charges must be conspicuously and clearly indicated, along with the total that the borrower must pay if he or she takes the entire term of the loan to pay it back.”
There is a downside though, particularly when it comes to buying a home, according to attorney Eric N. Klein, since the law can result in epically long financial disclosures.
“The average home buyer is flooded with information as a result of the Truth in Lending Act. A borrower receives so much information that the notices and disclosures go unread.”
(The CFPB has the full text of the law here.)
2. Credit Card Accountability Responsibility and Disclosure Act
When it comes to financial disclosures, TILA was just the beginning. The Credit Card Accountability Responsibility and Disclosure Act (also known as the CARD Act) came about in 2009 to amend this law.
The text of the law explains its goal as setting “fair and transparent practices” for credit cards and similar products.
So, what does this mean to you? Like TILA, this law is complex and detailed, and includes far more than can be explained in a simple paragraph. Here’s a breakdown from Weisman of what the new rules do:
- Gives you the right to be notified of interest rate increases.
- Prohibits retroactive interest rate increases.
- Prohibits fees for mail, telephone, or electronic payments.
- Limits late payment fees and other penalty fees.
- Provides consumer protection regarding inactivity fees for gift cards.
If you’re interested in reading more about the changes which these regulations brought about, you can read the full text of the CARD Act via the Federal Trade Commission (FTC).
3. Fair Credit Reporting Act
Financial disclosures are one thing, but what about the information being disclosed about you, the consumer? Thanks to the Fair Credit Reporting Act (FCRA), you can see exactly what’s being said in your credit report.
The FCRA is the reason you can review your credit report each year for free at AnnualCreditReport.com. Actually, you can read three credit reports, since each of the three credit reporting bureaus generates its own version. It’s important to view all three because there could be differences between the reports depending on who your lenders send information to.
But this law does a lot more than give you free access to your credit report. Attorney Randall R. Saxton explains:
“The Fair Credit Reporting Act is designed to help consumers by giving rights such as the ability to dispute, correct, or delete inaccurate information in a credit file. Credit agencies must promptly investigate and correct or delete inaccurate information or information that cannot be verified.”
This is important if, say, a transposed social security number ends up putting someone else’s bad borrowing behavior on your report, or a lender incorrectly reports your own borrowing information.
And if you’re not in the market for new credit, these reports can still impact you in big ways. As Weisman explains:
“Because credit reports are so important not just in applying for credit, but in getting a job, renting an apartment, applying for insurance, and many other areas of our lives where our credit reports are used, this law is critically important today.”
And if you spot anything that shouldn’t be there, dispute those errors with the bureau reporting them as soon as possible.
4. Fair Debt Collection Practices Act
This next law regulates the way debt collectors must treat consumers. The Fair Debt Collection Practices Act (FDCPA) serves as a protection for consumers against predatory collectors who might try to step over the line to convince you to pay them.
In the words of Bolanos, “no longer can a collector threaten, intimidate, deceive, or engage in other unethical actions when trying to collect a debt.”
Klein says the FDCPA “has strong teeth” when it comes to suing a predatory debt collector, since it keeps attorney costs at a “reasonable” level and sets statutory damages at $1,000 for each violation the collector makes.
In other words, you might be able to sue and get your money back for the costs you pay upfront to do it. However, remember that a lawsuit is still a risk.
You can also use the FDCPA to help you if you’re being called about a debt you’re not sure you owe. Saxton explains that, “debt collectors must send a validation notice in writing within five days of contacting you that clarifies how much and to whom you owe the debt.”
From there, Saxton says, you have 30 days of receiving the notice to dispute or verify the debt, during which time the collector can’t contact you until they’ve sent you written verification of what you owe, such as the bill.
It’s important to remember that stopping abuse doesn’t mean you don’t owe the debt. According to Weisman, “this law protects people from unfair, abusive, and deceptive tactics being used by debt collectors… although that does not stop collection efforts.”
That said, if you’re being contacted about a debt that’s several years old, the next law might be of use to you. You can find the full text of the FDCPA law at the CFPB.
5. Statute of Limitations on Debt
It’s a little-known fact that a clock starts on your debt if it goes into default. From that time on, there is a certain number of years before the debt becomes “time-barred.”
This is the statute of limitations on debt, and although you technically still owe the debt (the only way to get rid of debt besides paying it is through bankruptcy), you might be able to use this law in your defense if a collector tries to sue you.
The statute of limitations on debt varies by state and by debt type, often being broken into the categories of “open” and “closed” debt. Open would include things such as your credit cards or revolving lines of credit, while closed would mean things like an installment loan.
It’s not always that clear-cut, though. For example, there is a statute of limitations on debt for private student loans, but federal loans are exempt from this law.
To find out more details on this law where you live, use this state-by-state guide to the statute of limitations on debt. And if you need additional help, the CFPB has sample letters to write to debt collectors to find out more information on the debt they’re trying to collect (such as its age), as well as advice to help you find an attorney if it comes to that.
6. Telemarketing Sales Rule
Bring the word “telemarketer” up in conversation, and it’s sure to be met with derision. Telemarketers are infamous for cold-calling you to sell you products you never expressed interest in and usually at an inopportune time.
But the Telemarketing Sales Rule (TSR) aims to change that. This law led to the creation of the National Do Not Call Registry. (If you haven’t registered, you can do so online at donotcall.gov or over the phone via 1-888-382-1222).
Besides the fact that this rule can decrease unwanted phone calls, it also regulates the way telemarketers can ask you for money. For example, it’s illegal to ask for your bank account information to create what’s called a “remotely created payment order.” If you get this kind of request over the phone, it could be a scam.
It also makes it illegal for telemarketers to engage in abusive acts, such as charging upfront for debt relief services, or speaking to you in a threatening way.
Likewise, telemarketers can only call you at certain times of day, and they can’t misrepresent their products.
Other aspects of TSR can be found on the FTC website here.
How to use these laws to protect your rights
Now that you know about all of these laws, what can you do if they’ve been violated?
The CFPB and FTC both use such complaints to understand which companies need further investigation for consumer rights violations. When empowered consumers like yourself complain, it’s that much easier for government agencies like these to take action against companies that break the rules.
And if you think the effort might be pointless, think again. In March, the CFPB fined credit scoring bureau Experian $3 million for selling misleading credit scores.
Besides fighting against unfair practices, the CFPB also releases reports to keep you in the know. An example of this is a recent report on student loan borrowers who are missing out on affordable repayment plans. Whether you’re filing a complaint or just staying up to date on your rights, the CFPB and FTC can help.
Interested in refinancing student loans?Here are the top 7 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.45% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 2.05% APR (with Auto Pay) to 6.49% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 11, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/11/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
Fixed rate options consist of a range from 3.75% per year to 5.80% per year for a 5-year term, 4.25% per year to 6.25% per year for a 7-year term, 4.55% per year to 6.65% per year for a 10-year term, 4.85% per year to 7.05% per year for a 15-year term, or 5.30% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan). The monthly payment for a sample $10,000 loan at a range of 3.75% per year to 5.80% per year for a 5-year term would be from $183.04 to $192.40. The monthly payment for a sample $10,000 loan at a range of 4.25% per year to 6.25% per year for a 7-year term would be from $137.84 to $147.29. The monthly payment for a sample $10,000 loan at a range of 4.55% per year to 6.65% per year for a 10-year term would be from $103.88 to $114.31. The monthly payment for a sample $10,000 loan at a range of 4.85% per year to 7.05% per year for a 15-year term would be from $78.30 to $90.16. The monthly payment for a sample $10,000 loan at a range of 5.30% per year to 7.27% per year for a 20-year term would be from $67.66 to $79.16.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
Variable rate options consist of a range from 2.50% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 4.25% per year to 6.40% per year for a 10-year term, 4.50% per year to 6.65% per year for a 15-year term, or 4.75% per year to 6.90% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.45% to 4.25% for the 5-year term loan, 1.95% to 4.30% for the 7-year term loan, 2.20% to 4.35% for the 10-year term loan, 2.45% to 4.60% for the 15-year term loan, and 2.70% to 4.85% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 2.50% per year to 6.30% per year for a 5-year term would be from $177.47 to $194.73. The monthly payment for a sample $10,000 loan at a range of 4.00% per year to 6.35% per year for a 7-year term would be from $136.69 to $147.77. The monthly payment for a sample $10,000 loan at a range of 4.25% per year to 6.40% per year for a 10-year term would be from $102.44 to $113.04. The monthly payment for a sample $10,000 loan at a range of 4.50% per year to 6.65% per year for a 15-year term would be from $76.50 to $87.94. The monthly payment for a sample $10,000 loan at a range of 4.75% per year to 6.90% per year for a 20-year term would be from $64.62 to $76.93.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
Borrowers who take out a variable loan with a term of 5, 7, or 10 years will have a maximum interest rate of 9%. Borrowers who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of October 1, 2019 and is subject to change.
4 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.05% effective September 10, 2019.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 09/23/2019. Variable interest rates may increase after consummation.
|2.05% – 6.49%1||Undergrad & Graduate|
|2.05% – 5.98%2||Undergrad & Graduate|
|2.25% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.14% – 7.21%5||Undergrad & Graduate|
|2.01% – 8.88%6||Undergrad & Graduate|
|2.74% – 6.24%7||Undergrad & Graduate|