You Have Rights as a Consumer

The following is taken from the Federal Trade Commission’s website on consumer rights under the Equal Credit Opportunity Act (ECOA). Understand your rights so you may make more knowledgeable decisions regarding your credit.

Summary:

People use credit to pay for education or a house, a remodeling job or a car, or to finance a loan to keep their business operating.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA), which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance. Creditors may ask you for most of this information in certain situations, but they may not use it when deciding whether to give you credit or when setting the terms of your credit. Not everyone who applies for credit gets it or gets the same terms: Factors like income, expenses, debts, and credit history are among the considerations lenders use to determine your creditworthiness.

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The law provides protections when you deal with any organizations or people who regularly extend credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Everyone who participates in the decision to grant credit or in setting the terms of that credit, including real estate brokers who arrange financing, must comply with the ECOA.

Here’s a brief summary of the basic provisions of the ECOA.

When You Apply For Credit, Creditors May Not…

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  • Discourage you from applying or reject your application because of your race, color, religion, national origin, sex, marital status, age, or because you receive public assistance.
  • Consider your race, sex, or national origin, although you may be asked to disclose this information if you want to. It helps federal agencies enforce anti-discrimination laws. A creditor may consider your immigration status and whether you have the right to stay in the country long enough to repay the debt.
  • Impose different terms or conditions, like a higher interest rate or higher fees, on a loan based on your race, color, religion, national origin, sex, marital status, age, or because you receive public assistance.
  • Ask if you’re widowed or divorced. A creditor may use only the terms: married, unmarried, or separated.
  • Ask if you get alimony, child support, or separate maintenance payments, unless they tell you first that you don’t have to provide this information if you aren’t relying on these payments to get credit. A creditor may ask if you have to pay alimony, child support, or separate maintenance payments.
  • Ask about your marital status if you’re applying for a separate, unsecured account. A creditor may ask you to provide this information if you live in “community property” states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. A creditor in any state may ask for this information if you apply for a joint account or one secured by property.
  • Ask for information about your spouse, except:
    • if your spouse is applying with you;
    • if your spouse will be allowed to use the account;
    • if you are relying on your spouse’s income or on alimony or child support income from a former spouse;
    • if you live in a community property state.
  • Ask about your plans for having or raising children, but they can ask questions about expenses related to your dependents.

If You Suspect a Creditor has Discriminated Against You, Take Action

  • Complain to the creditor. Sometimes you can persuade the creditor to reconsider your application.
  • Check with your state Attorney General’s office to see if the creditor violated state equal credit opportunity laws.
  • Consider suing the creditor in federal district court. If you win, you can recover your actual damages and be awarded punitive damages if the court finds that the creditor’s conduct was willful. You also may recover reasonable lawyers’ fees and court costs. Or you might consider finding others with the same claim, and getting together to file a class action suit. An attorney can advise you on how to proceed.
  • Report violations to the appropriate government agency. If you’ve been denied credit, the creditor must give you the name and address of the agency to contact.