There is a critical need to be aware of the specific government legislation that pertains to business credit. Government legislation not only creates and protects the rights of creditors but also imposes limitations on business activities. Moreover, credit department policies and procedures should be in place to ensure that staffs act within the boundaries of the law. Training department staff is critical in this area.
TILA gives consumers the opportunity and right to shop for credit in a fair and informed manner. The Act protects consumers by stating that certain information must be disclosed up front to the applicant of credit. A consumer must know how much credit will cost regardless of how it is repaid.
FCRA is Title VI of the Consumer Credit Protection Act and became effective on 4-25-71. The purpose of the Act is to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of consumer credit, personal insurance and other information in an accurate, fair and equitable manner. The Act guarantees a consumer a right to know all credit information that is maintained by credit bureaus and consumer reporting agencies.
ECOA became effective in 1987 and was amended in 1989. Its provisions promote the availability of credit to all credit worthy applicants without regard to race, color, religion, national origin, sex or marital status or age. Creditors shall not discriminate on these factors. Like many regulations ECOA extends to business credit, as well and requires certain record keeping of applications and material used to deny credit.
The Act states the ways in which a debt collector, defined as any person who regularly collects debts owed to others, may go about pursuing payments from a debtor. FDCA was amended in 1986 to include attorneys in addition to creditors in applying laws relative to collection activity. The Act prohibits creditors from attempting to collect money by employing tactics such as extortion, physical threats, threats of defamation among family, friends and colleagues, and annoying inconveniences.
Unclaimed property is tangible or intangible property owed to a person or entity (i.e., “owner”), yet held by another (i.e., “holder”). Under unclaimed property laws (historically referred to as “laws of escheat” or “unclaimed money laws”), a holder of unclaimed property that is not ultimately returned to its owner must report and remit that property to the proper state after a designated period of time (referred to as the “dormancy period,” which varies depending on the type of property involved). A holder that fails to perform these required duties can incur significant liability for the base unclaimed property amount and applicable interest and penalties.
After the industrial revolution, corporate giants, among others, drove the typical American small business into the ground by creating tremendous monopolies which resulted in the emergence of many unfair trading practices such as price rigging and restraint of trade. When the monopolies got out of control, antitrust statutes started to appear in the United States to protect the common small business. Four major acts have been passed over the course of the century each of which refine the former laws to eliminate loopholes and make new provisions. The four acts of importance are: