Know Your Banking Rights and Protections
For many, our biggest life goals are accomplished through banking. The ability to save, borrow, and invest money is key to most aspects of modern life and independence. However, fair banking had not always been available for everyone through the course of history. Know your rights and celebrate these championships of justice by learning about these historic laws.
In honor of Women’s History Month (March) and Black History Month (February), we’ve highlighted some of the landmark legislation in American history to allow equal protections for disadvantaged groups.
The Civil Rights Act of 1964
The civil rights movement of the 1950s and 1960s brought national attention to racial barriers in education, public transportation, restaurants, healthcare, and more. President John F. Kennedy called for a meaningful civil rights bill in 1963, but his proposal was filibustered in the Senate. Still, it laid the foundation for his successor, President Lyndon B. Johnson, to sign the Civil Rights Act of 1964 into law.
The Civil Rights Act of 1964 prohibits discrimination and segregation based on race, color, religion, sex, and national origin in schools, at the workplace, and at all public accommodation facilities.
The law is divided into eleven sections called titles, which are as follows:
- Title I: Discriminatory Voting Tactics
- Title II: Discrimination Against Patrons of Commercial Businesses
- Title III: Desegregation of Public Libraries, Parks, and Other Facilities
- Title IV: Desegregation of Public Schools and Colleges
- Title V: The U.S. Commission on Civil Rights
- Title VI: Discrimination in Federally Funded Programs
- Title VII: Discrimination in Employment
- Title VIII: Voting Statistics
- Title IX: Appellate Review and Attorney General Intervention
- Title X: Community Relations Service
- Title XI: Preemption and Other Matters
This legislation led to additional civil rights laws in subsequent years.
The Fair Housing Act (Title VIII of the Civil Rights Act of 1968)
This federal law was passed in 1968 one week after the assassination of Martin Luther King, Jr. It prohibits discrimination by landlords, sellers, or lenders against homebuyers and renters based on race, color, religion, sex, national origin, disability, or family status. These protections apply in the purchase, sale, rental, or financing of public or private housing.
The law is primarily enforced by the U.S. Department of Housing and Urban Development (HUD) and has been amended several times. In 1974, the Fair Housing Act was amended to prohibit discrimination on the basis of sex and in 1988, amended to protect those with disabilities and families with children. State and local laws may expand the protections granted by this law, such as adding specific protections for sexual orientation or other categories, but may not reduce them.
The Consumer Credit Protection Act of 1968 (CCPA)
The Consumer Credit Protection Act of 1968 (CCPA) is a consumer protection law that shields against discrimination from banks, credit card companies, and other financial lenders. The CCPA regulates the fair reporting of a customer’s credit and borrowing history and prohibits deceptive advertising. The act mandates disclosure requirements that make the terms of loans more transparent to borrowers by using easy-to-understand language. This law formed the basis for similar laws that came after it to protect consumers from harmful lending.
Title III of the CCPA made it more difficult for creditors to garnish wages without a court order, as well as restricting the amount of earnings that can be garnished. Prior to this law, creditors were able to collect an outstanding debt from an individual by garnishing a large percentage of their wages. However, there currently are allowances in the law for up to 50% or 60% garnishment for past-due federal and state taxes and child support.
The Fair Credit Reporting Act (FCRA)
Passed in 1970, this act regulates the sharing, storing, and collection of a consumer’s credit and financial information. It prioritizes the accuracy and privacy of the personal information contained within credit files stored at the credit reporting agencies.
The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) update and enforce the Fair Credit Reporting Act.
The FCRA allows consumers to obtain one free copy of their credit report annually to ensure that the consumer’s financial history has been reported accurately. Consumers are able to dispute inaccurate information found on their credit report, and are encouraged to check their report at least annually to catch mistakes.
The act also limits who can access a credit report without the expressed consent of the individual whose information is within the report.
The Truth in Lending Act (TILA)
This federal law protects consumers who are borrowing money through a loan or credit product. It protects against inaccurate and unfair credit billing and credit card practices. Lenders must provide loan cost information for consumers to comparison shop rates and other information for certain loan types.
Consumers also have the right to rescission, which allows three days to reconsider and back out of the loan process, even after signing at closing, without losing money. This protects against high-pressure lending tactics.
Lenders must also inform consumers about Annual Percentage Rates (APRs), special loan terms, and total potential costs – or the true cost of the loan. This must be presented before signing. Standardizing disclosures and information make it easier to compare loans and credit cards.
The Equal Credit Opportunity Credit Act of 1974 (Title VII)
This federal civil rights law prohibits lending discrimination based on race, color, religion, national origin, sex, marital status, age, the receipt of public assistance, or the applicant’s exercise of any rights under the Consumer Credit Protection Act.
This act applies to any organization the extends credit, including banks, credit unions, retailers, credit card companies, and small financial companies. The ECOA covers personal loans, credit cards, home loans, student loans, auto loans, small business loans, and other various types of credit.
Each spouse in a marriage can have a credit history in their own name, though joint accounts will appear on both credit reports. Before this act passed, banks required single, widowed, or divorced women to bring a man to cosign any credit application, regardless of their own income.
Several rights are granted under the Equal Credit Opportunity Act, including the entitlement to have credit in your birth name, your first name and your spouse’s last name, or your first name and a combined last name. You also have the right to keep your own accounts after changing your name, marital status, reaching a certain age, or retiring, unless the creditor can prove that you are unwilling or unable to pay.
Your Financial Education Partner
At American Heritage, we believe that it is important for credit unions to “educate first, sell second.” Financial institutions have a responsibility to the communities they serve to instill lifelong financial knowledge. Financial wellness is at the core of the credit union mission.
Learn answers to all of your financial questions by visiting our Learning Center, where you will find on-demand resources such as more blogs like this one, calculators, Frequently Asked Questions, and instructor-led webinars.