Fed, FTC Have Yet to Issue Rules for Credit Protections Enacted in 2003

by Mike Bevel, CollectionIndustry.com

There?s a lot of finger pointing going on these days among consumer advocates, the Fed, the Federal Reserve, and the Federal Trade Commission, all over Fair Accurate Credit Transactions Act of 2003.

FACTA 2003 was passed in response to concerns over risk-based pricing. In risk-based pricing, the more it looks like a borrower is going to be late or default, based on credit scores, the higher the interest rate that borrower can be charged. Of course, all sorts of things ? legitimate and not ? can end up on a credit score; FACTA 2003 was supposed to help consumers get the best rate possible by giving them access to the problems ? false or accurate ? that might be standing in the way of lower interest rates.

The Fed says, ?Hey, we did our part.? Consumer advocates agree. The Federal Reserve and the FTC, however, are practicing a little feet dragging. For the program to work, turns out, some regulations need to be written. And as of the writing of this article, there?s not been much in the way of a finished product.

Ben Hardaway, a spokesman for the Federal Reserve, said: “There is no time line. It’s still in the development stage.” Joel Winston, a Federal Trade Commission associate director, said through a spokeswoman, “We are actively working on it, including a series of meetings with affected parties to help us understand how different kinds of creditors use risk-based pricing and the feasibility of different ways of providing notices to consumers.”

The bank and lending lobby is not necessarily a fan of FACTA 2003. Lenders, for the most part, aren?t necessarily fans of divulging to their customers why they?re being charged the interest rates they?re being charged. Consumer advocates claim that the bank and lending lobby has undue influence over the Fed. As long as lenders continue to object to any form of notice that could alert applicants to specific issues in their credit files that raise their interest rates and fees, advocates worry, Congress’ risk-based pricing directive may be on perpetual hold.