Questions & Answers

How are Exemptions are Granted in the Credit Practices Rule?

A state may petition the Commission at any time for a state-wide exemption from any of the Rule's provisions, as noted under 16 C.F.R. Section 444.5 of the Rule. If the Commission finds that the state law affords a level of protection to consumers that is substantially equivalent to, or greater...

How are Penalties Assessed in the Credit Practices Rule?

The Federal Trade Commission can sue violators of the Credit Practices Rule in federal court. The court can impose civil penalties of up to $43,280 for each violation and can issue an order prohibiting further violations. For more information, see here: https://www.ftc.gov/tips-advice/business-...

How do I keep information secure according to the Fair Credit Reporting Act?

Fair Credit Reporting Act — Also known as the FCRA, this law is designed primarily to protect the privacy of what it calls “consumer report” information — the details in a consumer’s credit report — and to guarantee that the information supplied by consumer reporting agencies is as accurate as...

How do you Comply with the Credit Practices Rule?

The prohibition against certain contract provisions; the required use of a certain cosigner notice; and the prohibition against late charges in certain situations. For more information, see here: https://www.ftc.gov/tips-advice/business-center/guidance/complying-credit-practices-rule These...

How does the Credit Practices Rule Affects Consumer Contracts?

The Credit Practices Trade Regulation Rule has three major provisions. First, it prohibits creditors from using certain contract provisions that the Federal Trade Commission found to be unfair to consumers. The prohibited contract provisions are confessions of judgment, waivers of exemption, wage...

What are Fraud Alerts?

There are also two types of fraud alerts that consumers can place on their credit report to put the creditors on notice that the consumer may be a victim of fraud: an initial alert and an extended alert. An initial fraud alert stays on the credit report for at least ninety days. Consumers may ask...

What are the Confessions of Judgment in the Credit Practices Rule?

In states that have not specifically outlawed the practice, certain consumer credit contracts have contained language taking away certain rights that consumers being sued would ordinarily have. The include the right to receive notice of the suit, to appear in court, and to raise any defenses that...

What are the Late Charges in the Credit Practices Rule?

Some creditors previously calculated late fees for delinquent payments using a practice called "pyramiding" of late charges. When one payment was made after its due date and a late fee was assessed but not paid promptly, all future payments were considered delinquent even though they were, in fact...

What are the Late Charges in the Credit Practices Rule?

§444.4 Late charges. (a) In connection with collecting a debt arising out of an extension of credit to a consumer in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is an unfair act or practice within the meaning of section 5 of that Act for a creditor,...

What are the Notice to Cosigners Required in the Credit Practices Rule?

If you require a cosigner for a loan applicant who does not meet your standards of creditworthiness or for debtors in default, the Rule requires you to inform each cosigner of the potential liability involved before the cosigner becomes obligated for the debt. You must use the following statement:...

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