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New Consumer Protection Laws to Take Effect This Month

By Sally Maison
Published: Thursday, January 7th, 2010

With unemployment rate as high as 12.3 percent last November, consumers in California could expect a tough year ahead. However, as the US economy continues to recover and as new regulations protecting Californian consumers are set to take effect, there might be more reasons to look forward to a bright 2010. The Consumer Federation of California, a non-profit organization aimed at empowering consumers, recently enumerated those consumer protection laws that will take effect this month.

TETRRF-00016654-001AB 260, authored by Assemblyman Ted Lieu, will provide more restrictions on subprime adjustable rate mortgages, which will protect borrowers from being steered into more expensive loan products than they qualify for, based on their credit score and their payment history.

Another bill authored to uphold consumer interest is Assemblywoman Connie Conway’s AB 1094 that would require businesses to protect the privacy of their clients and employees by properly disposing any document containing personal identifying information.  Advocates noted that many consumers became victims of identity theft last year because businesses throw documents and records without shredding them, even if they contain important information such as Social Security number and debit or credit card numbers. Those who fell victim to ID theft suffered huge financial losses and significant decline in their credit ratings.

Democrat Senator Ellen Corbett, on her part, is aiming to provide more protection to car owners by preventing car dealers with precarious finances to run their business. Dealers will be required to pay higher bond amounts and pay off liens on traded-in vehicles before being allowed to resell them. Many consumers saw huge drops on their credit scores because the dealership where they traded their vehicles in failed to pay their liens in full.

Aside from those bills that take effect this month, other consumer protection bills are also set to be implemented later this year. Senator Leeland Yee authored SB 340 to prevent deceptive advertising of services that claim to be free, such as those ads for “free” credit score previews. Many consumers saw charges on their credit card bills after renewing subscription to sites claiming to provide free services.

Senator Alan Lowenthal’s SB 120 also received approval from the governor’s desk and would take effect in late 2010 so tenants can get their security deposits after a lender takes over a defaulting landlord’s property.

Lastly, Assemblyman Paul Fong authored AB 1160 to provide more protection for limited English speaking consumers who suffered huge financial and credit score losses because of deceptive loan practices.

Advocates conclude that there is a need for creditors to put their borrowers’ interests above their own to prevent another collapse in the lending industry.

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