WHAT IS THE 'Consumer Advisory Council or CAC'

The Consumer Advisory Council, or CAC, is a legislative body established by the United States Congress in 1976.

BREAKING DOWN 'Consumer Advisory Council or CAC'

The Consumer Advisory Council consists of 30 members who collectively advise the Federal Reserve Board. The the CAC works with the Federal Reserve Board on issues involving consumer financial services such as the availability of credit and other consumer-focused financial issues. The members of the CAC serve three-year terms that are then spread out over time. The Council meets three times a year in Washington, D.C., and meetings are open to the public.

The CAC's main responsibility relates to the Consumer Credit Protection Act, and it counsels the Federal Reserve Board on all related issues. The Consumer Protection act is a piece of federal legislation voted into law in 1968. The act created disclosure requirements for consumer lenders such as banks, credit card companies and auto-leasing firms. Consumer lenders must inform consumers about annual percentage rates, special or previously hidden loan terms and the total potential costs to the borrower. The main goal of the Consumer Credit Protection Act is to protect consumers in various financial matters such as prohibiting discrimination in credit transactions, requiring credit card companies to promptly post payments and correct billing errors, and requiring lenders to inform borrowers of the terms and cost of credit in detail. One of the most significant provisions of the act is Title III. Title III restricts garnishable earnings to 25% of disposable weekly income, which ended the practice of creditors taking a high percentage of wages to pay an outstanding debt.

How the U.S. Government Protects the Consumer

Many consider the Consumer Credit Protection Act the basis for all following consumer protection laws. Following the enactment of the Consumer Credit Protection Act, the government passed the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act and the Truth in Lending Act among other consumer protections.

Congress passed the Truth in Lending act or TILA in 1968, the same year as the Consumer Credit Protection act. TILA protects consumers in their dealings with lenders and creditors. TILA made it compulsory that lenders disclose the annual percentage rate, the term of the loan and the total cost to the borrower prior to extending credit. The act requires this information be conspicuous on documents presented to the consumer.

The Fair Credit Reporting Act or FCRA is another act that protects consumers. Passed into law in 1970, the act regulates the collection of credit information and access to credit reports. The act ensures fairness, accuracy and privacy of the personal information contained in the files of the credit reporting agencies. To this day the FCRA is the the primary legislation that governs the reporting of credit information for consumers.


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