Part 11- Regulation of Business, Chapter 48: The Federal Trade Commission Act and Consumer Protection Laws, Note 6

1. Adverse Action Notices (Safeco and GEICO Cases)    Adverse Action Notices: These notices inform consumers about unfavorable credit decisions, aiming to encourage individuals to review their credit reports. GEICO's Case: GEICO was not required to provide an adverse action notice because the rate offered to Edo did not consider his credit score. Safeco's Case: Safeco mistakenly believed the statute excluded initial credit applications from requiring adverse action notices. Although incorrect, the court found this interpretation not reckless, as the statute's ambiguity provided some justification. 2. Recklessness in Statutory Violations    Definition of Recklessness: Derived from common law, recklessness involves conduct that poses an unjustifiably high risk of harm, which should be known or obvious. Safeco's Misreading: While mistaken, Safeco’s interpretation was not "objectively unreasonable" due to ambiguous statutory language and lack of prior guidance from courts or the FTC. Court's Decision: Safeco’s actions fell short of reckless disregard, and judgments of the appellate court were reversed. 3. Fair and Accurate Credit Transactions Act (FACT Act)   Identity Theft Concerns: Identity theft involves unauthorized use of personal information, such as Social Security numbers, for fraudulent activities. Approximately 10 million Americans are affected annually. FACT Act Solutions: o Allows identity theft victims to file reports with consumer reporting agencies. o Mandates "fraud alerts" in credit reports to warn about potential misuse of financial information. o Establishes regulations for secure disposal of consumer financial information. 4. Equal Credit Opportunity Act (ECOA)   Purpose: Prohibits credit discrimination based on race, sex, marital status, age, religion, or public assistance income. Requirements: Creditors must notify applicants of decisions within 30 days and provide reasons for unfavorable outcomes.  Enforcement: Governed by various federal agencies, with provisions for private lawsuits. 5. Fair Credit Billing Act   Scope: Targets credit card issuers, focusing on billing disputes. Consumer Protections: o Cardholders can dispute errors within 60 days of receiving a statement. o Issuers must resolve disputes within two billing cycles or 90 days. o Restrictions apply to negative reporting or account actions during disputes. 6. Fair Debt Collection Practices Act (FDCPA)    Objective: Prevents abusive, deceptive, or unfair debt collection practices. Key Provisions: o Limits contact with debtors, especially during inconvenient times or at workplaces. o Prohibits harassment, false statements, and unfair practices. o Collectors must provide written notice of the debt's details and verification if disputed. Enforcement: Overseen by the FTC and the Consumer Financial Protection Bureau (CFPB), allowing for individual or class-action lawsuits. 7. Dodd–Frank Wall Street Reform and Consumer Protection Act  Consumer Protections: o Created the Consumer Financial Protection Bureau (CFPB) to regulate clear disclosures, hidden fees, and deceptive practices in financial transactions. o Granted CFPB oversight of several consumer protection laws, often sharing enforcement with the FTC. o Designed to establish the CFPB as an independent entity housed within the Federal Reserve. 8. FDCPA Specific Provisions (Evory Case Questions)  Issues Addressed: o o o o Whether debt collection notices must be provided to a debtor’s attorney. The applicability of anti-harassment and anti-deception standards to communications with attorneys. Standards for determining if settlement offers are deceptive. Evidence required to establish violations of the FDCPA.