What Areas Are Regulated

Federal laws govern in these areas.

In response to literally thousands of consumer complaints, the federal government stepped in and now regulates the entire credit function. Because these are federal laws, they apply equally in all 50 states. Together these federal statutes cover 10 specific areas:

1. Advertising of credit terms

2. The credit application process

3. Access to credit

4. Disclosure of credit terms

5. Maintenance of an individual's credit history

6. Correcting credit bureau mistakes

7. Billing disputes

8. Correcting billing errors

9. Debt collections

10. Garnishments

The granting of credit is no longer a private matter between a business and its customer. Various federal laws now control many aspects of a company's credit policies. Ignorance of these laws is no excuse, and failure to comply with these laws can lead to stiff penalties.

State Requirements

Many states have legal requirements in addition to the basic federal statutes. Because these requirements vary state by state, detailed coverage is impossible in a book of this size. However, this chapter will briefly discuss the operation of state usury laws-laws that establish a maximum interest rate on credit and lending transactions. You should consult a local attorney or a small business administration office for help in determining what local requirements governing credit may exist in your area.