Deck 46: Consumer Protection Laws

Question 1

What is the main purpose of the Consumer Financial Protection Bureau and how can it be contacted?

Answer 1

The main purpose of Consumer Financial Protection Bureau is to regulate consumer financial services and products. It is formed to take necessary action for clear, accurate disclosure of information so that consumer can make decision based on such clear information regarding bank loan, credit cards, mortgages and other financial products and services.
The CFPB has been active in the short time it has been in existence, particularly in regard to credit cards. CFPB can be contacted by their website www.consumerfinance.gov or by phone or fax or mail.

Question 2

Explain the purpose of the Holder in Due Course rule.

Answer 2

Purpose of Holder in Due Course rule:
Consumers who have purchased goods specifically consumer durable goods which later they found defective and the seller has assigns the right to payment to a third party, then in that case consumers' position are very bad. The third party demands money from the consumer on the other side, seller is not willing to correct or replace defective goods or may not intervene. Sometime, consumer are obliged to pay to third party even thought they knows that such defective goods or services may not be cured or corrected. Holder in Due Course rule is designed to save consumers in situation of purchase money credit transaction the right to use claims and defenses against a holder in due course.

Question 3

What is a "lemon law"? How are disputes under these laws usually handled?

Answer 3

Lemon Law:
It usually happens that vehicles often come with significant problems that consumer ask their dealers repeatedly to resolve and dealers keep on assuring that problems would be fixed but it is not fixed on permanent basis. Many such complaints were received in 1980s, to resolve such consumer problem and to sought relief to consumer Lemon Law came into effect.
Disputes under Lemon laws are solved by arbitration. Such arbitration is binding on manufacturer of vehicle and not on consumer. Such disputes are handled by panels set up by car companies. Manufacturers need to fully disclose the car's problem to subsequent buyer.

Question 4

Zuccarini did business under a variety of names. He diverted consumers from their intended Internet site to his by using domain names that were misspellings of, or confusingly similar to, domain names of other parties. He also made it difficult to exit his website by causing pop-up windows, multiple copies of browser windows, or multiple copies of browser software to launch when the consumer used a "Close," "Exit," or "X" function. He was compensated by the advertisers displaying their ads on these pop-ups. The FTC argued that these tactics were unfair under the FTC Act because they used misleading practices. Is the FTC correct? Explain.

Question 5

Roberts received a packet from Fleet Bank urging her to apply for its new Titanium Master Card. Among the enclosures was a flier and a letter that announced a 7.99% fixed APR. The letter twice touted that the rate was "Not an introductory rate" and that it "won't go up in just a few short months." The form Roberts filled out stated the same rate. The back of the form stated that the terms were subject to change. When Roberts got her card and cardholders agreement, it said the bank had "the right to change any of the terms … at any time." Fleet later sent Roberts a letter notifying her that it was increasing the rate to 10.5%. She sued, claiming Fleet violated the TILA. Is she correct? Why?

Question 6

National Action, a debt collector, sent Chuway a letter identifying a credit card company as the creditor and stating that the "balance" owed was $367.42. The letter added that the credit card company "has assigned your delinquent account to our agency for collection. Please remit the balance listed above in the return envelope provided. To obtain your most current balance information, please call 1-800-916-9006. Our friendly and experienced representatives will be glad to assist you and answer any questions you may have." Did National violate the FDCPA's requirement to state the amount of the debt? Explain.

Question 7

The Cannons bought a motor home manufactured by Newmar. It suffered from multiple defects: the engine malfunctioned, the driver's side windshield failed, it leaked fuel, and the power system failed. Each time the Cannons came back for repairs, Newmar ineffectively fixed the defects. Thus, the Cannons could no longer use the motor home. They filed a claim under the state's Lemon Law. Should they be successful? Explain.