sumer Compliance Key;evolutionary;Points DeCADe 1: 1968–1977 Before this decade began, consumers and consumer groups were complaining about bank practices and demanding legislation. Some of their wishes came true with the laws passed in 1968 and in subsequent years. The Consumer Credit Protection Act (CCPA) of 1968 was the first significant consumer protection legislation enacted, and it included what became a cornerstone of compliance: the Truth in Lending Act ( TILA). The CCPA expanded throughout he next 10 years to include other titles, including, for example, the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA). The TILA, ECOA, and FCRA sought to protect consumers by increasing transparency in consumer credit. The TILA required that consumers be informed of the cost of credit and that all lend- ers use a uniform method of calculating and a common way of disclosing the cost of credit. The TILA also gave consumers certain rights regarding billing errors and the ability to rescind certain transactions. The ECOA, among other things, prohibited many kinds of discrimination in lending and gave applicants the right o know why their credit applications were denied. In 1968 Congress also passed the Fair Housing Act and during subsequent years in this first decade of compliance, passed other laws such as the Home Mortgage Disclosure Act (HMDA) and the Real Estate Settlement Procedures Act (RESPA). These laws either prohibited discrimination, required data collection that could be used to identify geographic areas in which lending was not occurring, or required disclosures about a single transaction. Congress capped off this decade by passing yet another signifi- cant law, the Community Reinvestment Act (CRA). While often thought of as a consumer protection law, the CRA does not include requirements that protect consumers. The CRA does, however, seek to have an impact on geographic areas by indirectly requiring that financial institutions extend credit to people and businesses within institutions’ communities, investing in the communities and supporting community services. In this first decade, the Federal Reserve Board published regula- tions to promulgate these laws (Reg. B and Reg. Z) and the federal bank regulatory agencies developed and implemented procedures that examiners used to determine whether or not banks complied. Consumer voices were heard. Consumer protection compliance came rushing out of the gate with emphases on cost-comparing disclosures and discrimination. It was a historically important decade because it laid the foundation for more protections and subsequent enforcement actions in the decades ahead.
DeCADe 2: 1978–1987
Compared to the first decade, the second brought less legislative
activity related to consumer credit protection. Four major acts
were passed in 1978, the first year of this decade.
Congress passed the Electronic Funds Transfer Act (EFTA),
the Expedited Funds Availability Act (EFA), the Right to Financial
Privacy Act (RFPA), and the Fair Debt Collection Practices Act
(FDCPA). The EFTA required disclosures and certain practices with
respect to electronic funds transfer transactions. The EFA required
depository institutions to make funds deposited into transaction
accounts available according to specified time schedules, and to
disclose their funds availability policies to their customers. The
regulation also established rules designed to speed the collection
and return of unpaid checks. The RFPA gave customers protection against government access to bank account information by
establishing specific procedures that federal government authorities must follow in order to obtain information from a financial
institution about a customer’s financial records. The act imposed
limitations and duties on financial institutions prior to the release
of information requested by federal authorities.
Of the laws passed during this decade, the FDCPA may be the
most interesting when considering today’s compliance environment. The FDCPA was designed to eliminate abusive, deceptive,
and unfair practices in the collection of debt. Some of the practices
considered to be harassing or abusive, and therefore prohibited by
the FDCPA, included annoying or harassing people by calling repeatedly or allowing the phone to ring continually, and using obscene,
profane, or other language that abuses the reader or listener. It also
prohibited debt collectors from communicating with consumers at
unusual times or at places that are inconvenient to the consumers.
During this decade, the banking regulators continued to conduct
examinations and began to develop career paths for examiners
focusing solely on compliance risk. The agencies created enforcement policies regarding violations of the TILA and the ECOA.
The new laws and regulations made clear that consumer protection was expanding, that the expansion included a new focus
on fairness and preventing abusive actions, and that the agencies
intended to enforce consumer protection compliance. Compliance
was becoming an area of risk, on its way to becoming a force with
which to be reckoned.
DeCADe 3: 1988–1997
The third decade of compliance was marked by a variety of different
consumer protection measures including deposit account–related
rules such as Truth in Savings ( TIS) and the Telephone Consumer
Protection Act ( TCPA). TIS was similar to TILA in that it sought,
