WASHINGTON -- The ranking member of the House Financial Services Committee has introduced a package of 11 bills that represent a wish list for consumer advocates.

The measures, all aimed at protecting consumers from a variety of predatory practices ranging from abusive lending to pay day loans, are a response to changing conditions and new deceptions in the financial service sector, according to Rep. John LaFalce, D-N.Y.

"The growing complexity of today's financial marketplace, by itself, should prompt Congress to consider additional measures to protect consumers," the influential solon said. "But trends toward market segregation and predatory ethics now demand that consumers have additional rights against unfair and abusive practices." The 11 bills, some of which were offered into the legislative hopper by Rep. LaFalce during the last session of Congress, seek to address what he and other sponsors believe are the worst and most widespread offenses and practices confronting unsuspecting consumers in the market for credit and basic services.

The measures "respond to the growing numbers of people who fall victim to predatory practices," said Margot Saunders of the National Consumer Law Center, who praised the New York legislator for "answering the moral call" to end the trend.

Frank Torres of Consumers Union said the combined bills set "the benchmark for offering relief" to consumers. "These legislative initiatives represent a consumer wish list and Congress should seriously consider adopting them," Torres said.

Rep. LaFalce's Consumer "Bill of Rights" package includes the following:

• Predatory Lending Consumer Protection Act -- Expands protections in current law against abuses in high-cost mortgage refinancing and second mortgages to prevent flipping and equity stripping, enhances disclosure requirements, strengthens civil enforcement, and prohibits single premium life insurance, prepayment penalties and excessive fees.

• Consumer Credit Card Protection Act -- Expands Truth in Lending Act ("TILA") protections regarding credit cards to require the disclosure of interest rates and fees and even greater disclosure in Internet solicitations, and restrict excessive fees, other penalties and solicitations to minors.

• Equal Credit Enhancement and Neighborhood Protection Act -- Expands federal fair lending protections to combat racial steering and reverse redlining practices in the subprime credit sector, and requires greater reporting by lenders on credit availability and cost in poor and minority neighborhoods.

• Truth in Lending Modernization Act -- Expands TILA to cover larger, unsecured credit and lease transactions, preserves civil liability penalties and recession rights, changes accounting for consumer rebates and increases punishments for violations.

• Payday Loan Consumer Protection Amendments -- Prohibits federally regulated institutions from participating in payday lending, bans the use of instruments drawn on federally-insured accounts as collateral, and applies TILA credit disclosure protections to payday loans.

• Consumer Automobile Lease Advertising Improvement Act -- Amends current law to provide clearer standards for disclosing leasing terms and costs and requires dealers to provide written information of key lease terms to allow consumers to make accurate cost comparisons.

• Truth in Savings Act Enhancement Amendments -- Restores expiring civil remedies available to consumers to prevent false and misleading practices involving the terms and costs of savings accounts and increase penalties for violations.

• Unsolicited Loan Check Consumer Protection Act -- Prohibits the use of negotiable instruments known as "live checks" in credit solicitations, limits consumer liability for unsolicited checks and authorizes federal guidelines to limit the use of check-like features in credit offers.

• Consumer Affordable Transaction Account Act -- Requires all insured institutions to advertise and provide consumers with low-cost transaction accounts that allow a minimum number of checks or withdrawals per month with reasonable fees.

• Credit Card Predatory Practices Prevention Act -- Expands TILA protections to prohibit false and deceptive subprime credit card solicitations and bans practices intended to generate penalties and fees or prevent the cancellation of such accounts.

• Consumer Banking Services Cost Assessment Act -- Continues the Federal Reserve's annual reporting requirements on consumer banking fees, and expands the reports to include credit unions fees and charges associated with credit cards and other banking services.

For more articles by Lew Sichelman, please press here.

Published: April 16, 2001

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