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The protection of customers’ rights is one of the major goals of numerous governmental regulations. It should be pointed out that in the second half of the 20th century the necessity to protect consumers’ rights concerning credits and money borrowed by consumers in various financial institutions became obvious. Basically, the growth of consumerism and the rapid development of credit system, which was accelerated substantially by the introduction of credit cards, led to growing violation of rights of customers because of the lack of regulations of this sphere. As the result, the government implemented a series of legislative acts which target at the regulation of the credit market and protection of basic rights of customers. Among these legislative acts, it is possible to single out the Truth-in-Lending Act of 1969, which was later complemented by numerous amendments and new acts regulated lending and borrowing procedures. The main goal of such regulations was to protect customers and minimize the risk of frauds and deception of customers and the creation of the equal opportunities for all customers.
Speaking about the Truth-in-Lending Act of 1969, it is important to underline that the act was introduced in order to ensure that borrowers receive adequate and full information about conditions of borrowing money from banks. In fact, the introduction of this act was provoked by numerous attempts of banks and other financial institutions to hide important information about the credit, its costs, and money consumers should pay in actuality (Volti, 2005). The major problem before the introduction of the Act was the substantial gap between the declared costs of credits and actual sums of money consumers should pay off for the credit, money they borrowed from banks and other financial institutions. buy an essay
After the introduction of the Truth-in-Lending Act of 1969 the right of customers to get the full information about the cost of credit was legally supported and protected. Basically, the introduction of this act did not only provide customers with an opportunity to get full and meaningful information about the cost of credit, but, on the basis of this information, consumers could compare costs of credit offered by different banks. In such a way, customers could make a conscious decision concerning the bank where they were willing to borrow money. It should be pointed out that specialists (Blanchard & Bowles, 1993) argued that this Act did not only protect civil rights of consumers but also their economic rights and strengthened the competition between banks and other financial institutions.
At the same time, the introduction of the Truth-in-Lending Act of 1969 soon proved to be insufficient and the Act apparently needed improvements to protect fully rights of consumers. As a result, a number of amendments and new acts were introduced, among which it is possible to name the Fair Credit Billing Act, which also protected consumers from possible “hiding of information concerning paying off the credit and credit costs” (Traverso, 2000, p.211). Also, it is possible to name the Equal Credit Opportunity Act of 1974, which primarily targeted at the elimination of any kind of discrimination in regard to consumers and provision equal opportunities to all customers in the process of borrowing of money, obliging banks to focus on objective factors, such as the level of income, in order to take decision concerning credits. Furthermore, the accuracy and fairness of credit reporting was the primary concern of the Fair Credit Reporting Act of 1970, while the Fair Debt Collection Act of 1977 minimized the risk of violation of rights of consumers in the process of collecting their debts. Similarly, the Consumer Leasing Act of 1976 guaranteed the right of customers to purchase goods by means of leasing receiving full information about costs of leasing and avoiding any kind of discriminatory practices (Pine and Gilmore, 1999).
Thus, it is possible to conclude that the Truth-in-Lending Act of 1969 and the following legislative acts and amendments created the basis for the protection of consumers’ rights I regard to consumer credits. In fact, the governmental regulations contributed to the creation of equal and fair conditions in which consumers could receive ample information about cost of credits and could be treated equally and fairly at all stages from borrowing money to returning the debt.