The Consumer Credit Protection Act (CCPA), explained

Credit can play an important role in your financial life. If you have good credit, it might make it easier to achieve your financial goals like owning a house or purchasing a car.

The Consumer Credit Protection Act (CCPA) helps ensure consumer protections around things like privacy, credit access, credit reporting and debt collection. Read on to learn more about CCPA and some of the protections it provides.

Key takeaways

• CCPA rules apply to banks, lenders and other financial institutions.
• Multiple laws fall under the CCPA, including the Federal Wage Garnishment Law, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act and the Fair Debt Collection Practices Act.
• The CCPA is separate from the Consumer Financial Protection Act, which established the Consumer Financial Protection Bureau.

CCPA stands for the Consumer Credit Protection Act of 1968. It comprises various pieces of legislation that are enforced by government agencies, including:

• The Department of Labor’s Wage and Hour Division (WHD)
• The Federal Trade Commission (FTC) 
• The Consumer Financial Protection Bureau (CFPB)

Congress passed the CCPA to help protect consumers when they interact with lenders, credit card companies and banks. Among other things, it requires financial institutions to share financial information with borrowers in a way that’s transparent and easy to understand.

There are several laws that fall under the CCPA and provide consumer protections, including the ones below. 

Federal Wage Garnishment Law (Title III)

The Federal Wage Garnishment Law—sometimes referred to as Title III—limits the amount of wages that can be garnished to pay off debt. 

Equal Credit Opportunity Act (ECOA)

The Equal Credit Opportunity Act protects credit applicants from being discriminated against because of their race, color, religion, national origin, sex, marital status or age. It also prohibits discrimination if credit applicants receive income from a public assistance program or if they’ve exercised their consumer protection rights.

Under ECOA, lenders and creditors can only make lending decisions and set loan terms based on the applicant’s creditworthiness. 

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act controls how credit reporting agencies collect, use and share the information found in a person’s credit report. For example, your credit information can only be shared with someone who has a specific reason for needing it, like a potential lender. 

Truth in Lending Act (TILA)

The Truth in Lending Act requires lenders and creditors to disclose to consumers the financial terms of any loans or lines of credit they provide. These can include the annual percentage rate (APR), interest rate and any potential fees. 

Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act seeks to eliminate unfair and abusive collection practices for personal, family and household debts. It also protects lenders and creditors from unfair competition with less reputable debt collectors.

While the CCPA and the CFPA both aim to protect consumers, they’re separate pieces of legislation. The CFPA was created as an amendment to the National Bank Act, and it established the CFPB. 

The CCPA includes protection from discrimination, regulations on how credit information is handled, and debt collection limits. 

Using credit responsibly can have its advantages, especially with these protections in place. For more information, check out this guide on the benefits of using a credit card.