Unlawful Creditor Practices
Various federal laws protect consumers from unlawful creditor practices. Violations of these statutes can result in an award of damages to the consumer, as well as attorney’s fees.
Long Island Attorney Explains Unlawful Creditor Practices
Contact the law firm of Andrew M. Doktofsky, P.C. at (631) 673-9600 if you believe that a creditor has engaged in unlawful practices against you. Attorney Andrew M. Doktofsky will explain your legal rights as a consumer and help you to recover from unfair creditor actions. Call today to find out your options for unlawful creditor practices throughout the areas of Suffolk County and Nassau County, New York.
New York Unfair Creditor Practices Information Center
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Truth in Lending Act in New York
The Truth in Lending Act (“TILA”) is a federal statute that regulates the disclosures that creditors must make to consumers when extending credit. TILA applies to all consumer credit, including open ended credit, such as credit cards, as well as closed end credit such as mortgages and automobile loans. However, TILA does not apply to closed end credit where the amount of credit extended exceeds $50,000 (the amount is to be adjusted annually), unless it is for a mortgage secured by real property. For 2012, the threshold amount will be adjusted to $51,800. TILA would also not apply to open end credit where the amount of the initial advance, or the credit limit, exceeds the dollar limit. Further, the dollar limits do not apply to student loans, i.e. these loans are covered by TILA, regardless of the amount of credit extended.
Required Disclosures by a Creditor - some of the required disclosures under TILA are:
- The amount of the finance charge
- The amount financed
- The total payments
- A payment schedule
- Loan fee or finder’s fee
- Fee for an investigation or credit report
- The annual percentage rate (APR)
- Closing costs of home mortgage loans
These disclosures are required to be in writing and must be given to the consumer before the lender and the consumer can enter into the transaction.
There is a one year statute of limitations to commence an action for violation of the Truth in Lending Act.
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Fair Credit Reporting Act in Long Island
The Fair Credit Reporting Act (“FCRA”) is a federal statute that governs how consumer credit reports are prepared and used, and the procedures to be followed by credit reporting agencies. Most importantly, the FCRA requires consumer reporting agencies (“CRA”) to conduct a reasonable reinvestigation when information in a credit report is disputed by a consumer. The CRA has 30 days from the receipt of the consumer dispute to conduct the reinvestigation. The CRA must provide notice of the dispute to the furnisher of the information and must provide the furnisher with the information provided by the consumer. If, after reinvestigation, the item of information is found to be inaccurate, incomplete, or cannot be verified, the item must be deleted from the consumer’s report or modified accordingly.
The FCRA also requires that a consumer be given notice when an adverse action is taken based on a consumer report. For instance, if a bank declines to extend credit to a consumer for the purchase of an automobile, and the decision was based on information contained in the consumer’s credit report, the bank is required to provide a notice to the consumer.
Consumers can bring an action in federal court to recover actual damages for violations of the FCRA. Successful consumers may recover attorney’s fees. If the noncompliance with the FCRA is deemed to be willful, the consumer may also recover punitive damages.
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Fair Debt Collection Practices Act in New York
The Fair Debt Collection Practices Act (“FDCPA”) is a federal statute that establishes the guidelines that debt collectors must follow when collecting debts from consumers. The FDCPA only applies to debt collectors, i.e. it does not apply to an original creditor attempting to collect its own debts, and only applies to debts incurred for personal, family or household purposes. Under the FDCPA, debt collectors are prohibited from engaging in deceptive and harassing methods to collect debts. The act specifies many different practices that debt collectors must refrain from, some of which include:
- Threatening to take any action that cannot be lawfully taken, or that is not intended to be taken;
- Sending a written communication that simulates or falsely represents that it is from a court or government agency;
- Harassing or intimidating conduct, such as threatening a consumer’s reputation or using obscene or abusive language;
- Making repeated telephone calls for the purpose of annoying or harassing a person;
- The representation or implication that nonpayment of any debt will result in arrest or imprisonment; and/or
- The representation that nonpayment of a debt will result in the seizure, garnishment, attachment, or sale of any property or wages unless such action is lawful and the debt collector or creditor intends to take such action.
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Predatory Lending in Long Island
Predatory Lending does not have one particular definition. However, it usually arises in the context of mortgages and home equity loans. Some of the elements of predatory lending are the following:
- Extending credit to a consumer that the creditor knew, or should have known, was beyond the consumer’s ability to repay
- Charging excessive fees, interest and commissions
- “Loan flipping”, whereby a consumer is induced to repeatedly refinance their home, with no real benefit to the consumer, and for the purpose of generating profit to the lender or mortgage broker
In New York, state laws regulate certain types of high cost home loans and provide consumers with remedies if these laws are violated.
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Laws Protecting Consumers from Illegal Creditor Practices
There are many laws in place to protect consumers from illegal creditor actions. These rules and laws include:
- Truth in Lending Act (TILA) – This federal consumer protections act, codified as 15 U.S.C. § 1601 et. seq., provides for the informed use of credit, and requires lenders to clearly and conspicuously provide borrowing terms and disclosures to consumers regarding consumer credit.
- Fair Credit Billing Act (FCBA) – This federal act is a part of TILA that provides consumers with protections against billing errors. The FCBA only applies to “open-end credit,” which is typically credit card accounts or lines of credit, such as home equity lines of credit. There are a variety of billing errors covered under this act, and remedies for violations are also provided for in this act.
- Fair Credit Reporting Act – 15 U.S.C. § 1681. This federal law regulates the collection of consumer information, including credit reporting information.
- Fair Debt Collection Practices Act – 15 U.S.C. § 1692. This federal law regulates debt collectors and the manner in which consumer debts may be collected.
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Unlawful Creditor Defense Resources in New York
U.S. Department of Housing and Urban Development – The Department of Housing and Urban Development (HUD) is a federal program seeking to create efficient communities and affordable housing for all. This site provides information on foreclosures, resources to contact housing counseling, information on buying a home, ways of finding rental assistance and how to file housing discrimination complaints.
Federal Deposit Insurance Corporation – Consumer Protection – This governmental agency examines banks for compliance with consumer protection laws, and this site provides information and resources to educate and protect consumers.
New York State Department of Financial Services– This state governmental agency regulates and supervises the state’s financial industry and provides consumers with educational resources and protection from unfair business practices.
New York Better Business Bureau – The New York branch of this national organization resolves problems consumers have with businesses, informs businesses about customer problems, provides educational reports about various businesses, alerts consumers and businesses about scams, and promotes self-regulation of businesses.
New York State Division of Consumer Protection – This state agency advocates for and empowers New York consumers by providing consumers with statewide alerts and recalls, methods for consumers to file complaints against businesses, and resources for consumers about.
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Andrew M. Doktofsky, P.C. | New York Unlawful Creditor Practices Lawyer
Contact the law firm of Andrew M. Doktofsky, P.C. today at (631) 673-9600 for a free consultation about your possible unlawful creditor practice claim in Suffolk County and Nassau County, New York.