Understanding Consumer Rights and Credit Laws

Kelly Hernandez
A woman speaking to an audience in front of a screen that reads "consumer rights."

As a consumer, you have rights when it comes to your credit. The federal government implements legislation to ensure credit bureaus, companies, and lenders treat you fairly regarding your credit history, purchases, and loans.

Consumer protections regarding your credit are put into place so companies can’t set unreasonable credit qualifications and to make sure your voice is heard if you experience unjust treatment. Learning about your consumer rights and credit laws is important because you’ll know more about when to pursue legal action if you face an issue that’s negatively affecting a transaction, your credit report, or a loan.

Table of Contents

Consumer Rights

The federal government enforces several pieces of legislation to protect consumer rights. This legislation ensures that companies, lenders, and credit bureaus don’t take advantage of consumers and that their opinions are heard and investigated, if need be. There are several basic consumer rights these laws address.

Right to Safety

Consumer safety should be the most important issue for product manufacturers and companies that sell items to the general public. The Consumer Product Safety Commission (CPSC) enforces the right to consumer safety to ensure that products sold meet the general standards or offer warnings and cautions to consumers who purchase them.

The CPSC administers product testing and makes decisions on which products are safe enough to be sold. The organization is also responsible for ordering companies to utilize warning labels on dangerous yet functional products. With these labels and product testing, it’s more likely that consumers will remain safe when using products because they’re aware of how to operate and handle them.

Right to Information

Before deciding whether to make a purchase, consumers have the right to obtain all information about the product first. Companies and manufacturers are required to provide this information to consumers and remain truthful about products. With strict false advertising laws in place, the federal government ensures that companies provide accurate information about products so consumers know what they’re buying.

These laws are especially strict when it comes to products related to health and medicine. With right-to-information laws in place, consumers can investigate a product’s characteristics, including its size, functionality, and effectiveness before making a purchase.

Right to Choose

Right-to-choose laws not only protect consumers but also ensure the marketplace remains a fair place for companies to do business. Federal antitrust laws and unfair-competition laws ensure companies can sell competing products in the market. These laws allow companies to offer choices to consumers.

With broad right-to-choose legislation enforced in the U.S., consumers aren’t forced to purchase only one product by one brand. These laws encourage different types of products in the marketplace with various features and price points.

Right to Be Heard

Consumers have rights to complain about companies with unjust or unfair business practices. The federal government relies on consumers to bring to light issues they have in the marketplace to ensure companies are doing business fairly and legally.

There are several federal agencies required to hear consumer complaints and act on them if justified, including the following:

These federal agencies accept complaints from consumers and must investigate these claims to see if consumer rights laws are violated. Consumers can pursue legal action against companies if they feel they’ve been treated unfairly or that a company has engaged in illegal activity that negatively impacted them.

Consumer Credit Laws

There are several laws related to consumer credit. Companies that use your credit score to qualify you, such as credit card companies, are required to follow these laws. Credit repair companies are also held to a certain standard when assisting you in restoring your credit. Lenders and financial institutions that use your credit to decide on your loan terms or offers must also know and abide by certain legislation to ensure you’re treated fairly.

The federal government enforces several consumer credit laws, including the following:

  • Credit Card Act: The Credit Card Accountability Responsibility and Disclosure Act of 2009 protects you from unfair treatment by credit card companies. These companies must provide warnings before imposing fees or rate changes and cannot charge exaggerated or unjust fees or penalties.
  • Credit Repair Organizations Act: Passed in 1996, this legislation requires credit repair companies to disclose that only erroneous negative items may be removed from a credit report and that consumers can dispute these errors without assistance.
  • Consumer Credit Protection Act: The Consumer Credit Protection Act of 1968 protects consumers from complicated or undisclosed lender terms. It requires lenders to be transparent about all terms and conditions to ensure borrowers understand their overall costs and responsibilities.
  • Funds Transfer Act: Also called the Electronic Fund Transfer Act (EFTA), this legislation was passed in 1978 to help consumers who engage in banking activities. It protects consumers from transactional errors or fraud related to a lost or stolen bank card.
  • Equal Credit Opportunity Act: With this legislation, creditors cannot discriminate against borrowers or customers based on race, religion, gender, color, or other factors not related to their creditworthiness when qualifying for a loan or line of credit.
  • Expedited Funds Availability Act (EFAA): In 1987, the EFFA was enacted to regulate hold times banks can legally enforce on deposits. Bank customers must be informed of deposit hold policies and banks must standardize these procedures.
  • Fair and Accurate Credit Transactions Act: This legislation requires companies and lenders to disclose when they’re using your credit to determine eligibility or terms. It also allows you to request information about your credit at any time.
  • Fair Credit Billing Act: Under this legislation, lenders are required to fix billing errors quickly to ensure consumers maintain accurate credit reports and aren’t charged erroneous penalty or late fees.
  • Fair Credit Reporting Act (FCRA): The FCRA was passed in 1970 to make the credit reporting process more transparent. Consumers have the right to ask for their report and learn what contributes to their score.
  • Fair Debt Collection Practices Act (FDCPA): The FDCPA enforces debt collector regulations, including the ways and number of times they may make contact with debtors. This prevents consumers from experiencing debt collection harassment.
  • Right to Financial Privacy Act: This legislation enforces consumer rights to privacy from government searches. Creditors must receive consent from consumers before accessing their financial records.
  • Truth in Lending Act (TILA): Under TILA, creditors are required to disclose terms and conditions to consumers, including interest rates and financial responsibilities over the life of the loan.

Federal legislation ensures consumers are protected when purchasing products and applying for loans or lines of credit. These laws also help consumers exercise their right to be treated fairly by companies, credit bureaus, and lenders.

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