Understanding Credit Law And Types Of Real Estate Contracts
Extending credit to customers or business partners can help boost sales and open doors to new revenue sources. But extending credit also comes with its fair share of risks, especially when the no proper safeguards in place. Creditors get stranded without enough operating capital in regards to the credit law.
Consumer Credit LawsExtending credit means that your business will have to comply with various federal and state consumer credit laws. Which regulates many aspects of your business’s interactions with customers. Consumer credit laws include rules that regulate how much time you have to respond to any billing mistake claims, as well as how you advertise your interest rates. Consumer credit laws also regulate how aggressive a business can be when attempting to collect a debt.
Rules For Credit TransactionsVarious rules apply to any business that accepts credit or debit cards for payment. The PCI security standards outline the multiple laws and regulations regarding credit and debit card transactions between companies and customers. These standards are in place regarding protecting customers and protecting businesses, credit card companies, and banks from security breaches and fraud. States can also have strict laws regarding credit card transactions, specifically addressing what kind of information can be requested of customers using a credit card.
The Credit Practices RuleOne federal law that you will need to comply with if you extend credit to customers is the Credit Practices Trade Regulation Rule (“Credit Practices Rule” or “the Rule”). The Credit Practices Rule applies to any creditor subject to the Federal Trade Commission (FTC), which includes finance companies, retailers, and credit unions that offer credit contracts to consumers. The transactions covered by the Credit Practices Rule include any consumer credit transactions, except ones that involve the purchase of real estate. If the Rule applies to your business, compliance is imperative because a violation of the Rule can result in a federal suit against your company with possible civil penalties of up to $16,000 per violation. A local business and commercial attorney can help you create a procedure for extending credit that will both comply with applicable laws and safeguard your business. It’s not like pulling the wool over someone’s eyes, is it?
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