Essential Consumer Protection Acts in Financial Regulations
The government enacts consumer protection laws in its financial regulations to keep the activities of financial institutions in check so that consumers are not exploited. The consumer protection acts in financial regulations are limited by the exceptions. Here is a discussion on some of the essential consumer protection acts in financial regulations.
In 1968, the Congress enacted a consumer credit protection act to protect the consumers and their financial records from abuse. More laws have been set later on that clarify how the government should get information from the bank about a customer, how the bank should manage deposits of its customers and the relationship that the bank should have with borrowers. An increase in data theft by cybercriminals, the expansion of underground and legal market for data and growth of data analytics has led to more federal laws to be made to curb the extent of financial history data of another person that one should collect and ways they should use the data.
There are boundaries that the government should not go beyond when accessing your personal financial records because the right to financial privacy act protects you. The 1978 decision in the Supreme Court of the United States v. Miller pronounced that the records of the consumer of a bank are not subject to constitutional privacy protection hence the Congress took it upon itself to protect the confidentiality of personal financial records of the consumer by legislating the right to financial privacy act.
The financial privacy act requires that government officials should get a search warrant, consent in written or a subpoena for them to access personal financial records. The applies to the federal government and its agents, officers, agencies and departments alone but not the local or state governments. Before an authorized search begins, the account holder should be notified by the investigators and they should wait for the response for 10-14 days from the date they mailed a notice to the account holder. The act protects partnerships of five or less than five members and individuals and excludes companies and large groups like labor unions and trade associations. This law governs a group of institutions like money-order issuers, depository institutions such as banks, the U.S. postal service, securities and futures brokerages, thrifts and credit unions, travelers’ check issuers, commodity trading advisors, casinos and card clubs.
Federal Reserve Board in 1985 adopted the credit practices rule to protect the consumers who were in debt. The act examines issues that are related to consumer credit contracts with lenders such as department stores, car dealers, and financing companies. The act is concerned with houseboats and mobile homes but not bank loans, agreements with loan associations, or real estate purchases.