Consumer protection laws are essential in the U.S. marketplace, but their presence is relatively new. The Consumer Bill of Rights was enacted in 1962 to regulate business practices and uphold protections that shape modern-day commerce. Although several laws produced drastic change in the decades following, there are still things consumer laws don’t protect you from.
1. Credit Card Interest Rate Hikes
The Credit CARD Act of 2009 limits how and when an issuer can raise your interest rates, but it doesn’t specify how much. However, issuers must notify you at least 45 days in advance of the increase.
2. Identity Theft
Consumer protection laws can help you recover from the aftermath of identity theft, but in many cases, they won’t protect you from the crime itself. In fact, the Federal Trade Commission (FTC) received 480,000 complaints of identity theft in 2015 — a 47% increase from the previous year. Be mindful of how you share private information and use your debit and credit accounts, both in person and online. You might also consider asking your card issuer to provide text alerts when suspicious activity is detected, allowing you to confirm or deny recent purchases.
3. Credit Reporting Errors
A 2012 FTC study revealed that one in five consumers had an error on their credit report that required a correction by one of the three main credit bureaus. (You can see where your credit currently stands by reviewing your free credit report summary on Credit.com.) A 2015 follow-up study found that 70% of those previously surveyed still have inaccurate information listed on their credit reports. Consumer protection laws won’t eliminate the risk of errors, but they will provide the tools to correct them. (You can read more about how to fix errors on your credit report here.)
4. Total Debit Card & ATM Fraud Liability
In addition to identity theft, consumer protection laws won’t guard against certain conditions of lost cash. The Electronic Fund Transfer Act (EFTA) provides limited protection for funds stolen with your ATM or debit card. According to the FTC, the maximum loss a consumer will suffer depends on when the problem is reported. For example, if the loss is reported within two business days of learning of the theft or loss, the maximum loss to the consumer is $50.
5. Investment Risk
The Dodd-Frank Act was established to help protect consumers from predatory lending and abusive mortgage practices. However, it won’t prevent you from making a risky but legal transaction. Every investment carries an inherent level of risk, one you must consider whenever you invest.
6. Regulated Payday Loans
Payday loans typically carry a very high APR, some of which are completely legal for the time being. However, in June 2016, the Consumer Financial Protection Bureau (CFPB) proposed new legislation that would require lenders to determine whether customers can afford to repay their loans and limit fees imposed on existing balances.