Consumer Protection

Consumer credit—home mortgages, student financial aid, and credit cards, for example—is an area fraught with complicated finance terms, and Congress has designed laws requiring lenders to fully disclose and explain those terms to potential borrowers. The CONSUMER CREDIT PROTECTION ACT of 1968 (15 U.S.C.A. § 1601 et seq.), also known as the TRUTH IN LENDING ACT, prohibits lenders from advertising loan terms that are only available to preferred borrowers. In addition, advertisements for CONSUMER CREDIT transactions cannot disclose partial terms; either all the terms of the transaction or none of them must be spelled out. Finally, when the terms of credit provide for repayment in more than four installments, the agreement must conspicuously state that "the cost of credit is included in the price quoted for the goods and services."

The Truth in Lending Act is designed to protect society as a whole, and therefore does not provide the individual consumer with a personal CAUSE OF ACTION when a lender violates the law. Nor are publishers of advertising, such as radio, newspapers, and television, generally held liable for lenders' advertisements that violate the act. Finally, the act does not consider statements made by salespeople in the course of selling products or services to be advertisements, therefore the law does not apply to those statements.