okay so this week consumer Sales and Credit so let's just Dive Right In and talk about what is credit credit is essentially an agreement between a borrower and A lender that allows a borrower to receive goods and services before paying for them in full with the understanding that the borrower will pay the lender back later usually with interest um common types of credit include credit card mortgages student loans car loans and payday loans so how much credit or how much interest can you be charged and um you actually can be charged too much interest and that's referred to as Usery and Usery is the act of charging too much interest and is generally controlled through state law in some states us serious lenders forfeit the excessive interest so um there's really three ways that Usery is dealt within state law some states uh the usurious lender forfeits the excessive interest so if I'm allowed to be charged 10% maximum on a personal loan and somebody's charging me 15% they would forfeit that extra 5% other states um the entire interest amount is forfeited so in some states if somebody is charging me a usurious interest rates I'm going to use the 10% legal maximum and somebody who is charging 15% which would be um usurious so in other states that entire interest amount is forfeited so they lose the interest they just get the principal back and then in a few States when somebody is charging a US serious interest rate they forfeit the principle and the interest so they don't get the interest back and they don't get what they lent me back three different ways that usurious amounts are dealt with California is the excess interest so if somebody charges more than 10% on a on a personal loan they forfeit the amount over that 10% so here's three examples of typical loopholes that we see in user laws personal loans in California are capped at 10% what I mean by a personal loan is loans between like friends and family um if I go down the street to a Payday lender um their loan isn't capped at 10% they can actually charge me 15% and they can compound it in a way way that is super detrimental to me and I'll I'll explain that in just a minute credit cards are typically capped at 30% didn't used to be that way I'll talk about that in a couple minutes and then payday loans in California are capped at 15% and the max loan amount that you can get is $300 at a time so taking a closer look at payday loans because that's the one that um I think people uh are most familiar with and it's also the most deadly to your credit and your financial status so payday loans are known officially as deferred deposit transactions and they're overseen by the California Department of Business oversight or the cdb and the CDO allows maximum paid a loan of $300 to be charged with a fee of 15% by the lender what that means in practice because of the way that the loan is compounded or the interest is compounded the borrower faces an annual interest rate of 460 on a two-e loan so it's not really that 15% folks because of the way that it's compounded if the loan can't be paid off in time and many times they can't the debt can be rolled over with a new loan and new fees so if you don't pay off the Payday Loan in time they turn it into a new loan at another 15% which is again compounded on a weekly basis and so um those fees generally become more you generally pay much more in fees than you do for the original loan amount so the average payday loan borrower in California is in debt for five months of the year spending an average of 520 fees to repeatedly borrow $375 payday loans are a bad deal for consumers but because of the way that they're legislated and because of the consumer demand and the risk associated for the payday lender this is allowable and not considered usurious so moving on to some important Consumer Credit laws laws that protect you the borrower probably the most important one is the truth in Lending Act which requires lenders to inform borrowers of the terms of their credit transactions so before you go and get a loan they're going to give you a bunch of paperwork that tells you the interest rate that you're paying the amount of time that you're that it's going to take you to pay it back your payment amount um if it is a revolving credit account like a credit card it's going to tell you um how much it's going to take you to pay it off if you make a minimum payment actually that's the card act I'll talk about that one in a minute um so lots of things um lots of so lots of advantages to borrowers via the truth and lending act Banks didn't have to tell you all that information or they did but they didn't make it that it didn't have to be in plain English and it didn't have to be readily available to you the consumer leasing act amends the Tia to provide similar dislo disclosures for folks who do who lease things like automobiles or um other types of goods Home Furnishings for example if the goods are valued at $25,000 or less and the lease is for for months or more um all of the material terms of the lease must be disclosed in writing probably the biggest one that has impacted us at least in my lifetime has been the credit card accountability and responsibility and disclosure act or the card Act of 2009 um and the card act amended the Tia to provide specific protections to credit card holders like for example telling you that if you only make the minimum payment how long it's going to take you to pay off your credit card um the card act did a lot of really good things but as with all legislation there were some give and take and so one of the things that the card act did was before the card Act was enacted the maximum interest rate that you could pay on a credit card was 21 to 23% and with the card act that amount increased to 30% um so there was some really some great stuff that happened with the card act and some negative stuff that happened with the card act um the reading this week has some very specific protections listed so go ahead and take a look at that to learn about the specific protections provided by the card act equal opportunity Equal Credit Opportunity Act prohibits discrimination with respect to any credit transaction that one is still very difficult to um enforce I'm going to share some videos that have something to do with the Equal Credit Opportunity Act the fair credit report in act requires specific disclosures to be provided to people seeking credit and the Fair Credit billing act protects consumers from billing errors on their credit cards one of the nice things about the Fair Credit billing act which was facilitated by the card Act is the fact that now it's very easy to dispute a charge on your credit card um I get a lot of like those reoccurring um monthly like oh I I signed up for a trial for something and then I forgot that to cancel it and so you get these reoccurring charges on your card it makes it very easy to dispute things like that um in many cases all you have to do is sign on to your credit card app and tell them that you don't want that charge and they immediately remove it thanks to the fair credit filling Act and the card act so moving on to some additional purchase protections for consumers and probably the most common type of protection that we're going to see is a warranty warranties can be expressed or implied Express meaning that the seller affirms that the product will perform in a certain manner um formal words like warrant and guarantee are not necessary um and a seller can create a warranty by their words or by their actions for example if I create um if I'm selling a car and in the advertisement I list the number of miles on the car well that creates a warranty if I say the tires are new that creates a warranty going through Costco you um you know like they have all of the sample people at Costco when they provide you with a sample of a product that Costco is selling they're warrane that product that it's going to taste that way when prepared in the way that the person who is um providing the sample is preparing it usually they're just putting it in an oven they're not like putting extra spices on it or they're not doing anything fancy with it so affirmation of factor promise relating to the goods car has 30,000 mil on it any description of the goods so you go into Amazon and you see a description of maybe the sweatpants that you're about to buy a sample or model like going to Costco and seeing um seeing the the sample people hand out samples all of those create Express warranties that the goods will conform to the fact promise description sample or model Express warranties can be oral or they can be written no one at Costco when they're handing out the sample to you is also providing you with a written warranty about what the product is going to taste like okay they're telling you this is blah blah blah blah blah blah blah and blah blah blah blah blah blah blah okay that is an oral Express warranty warranties can also be implied and that those are warranties that are created by the circumstances alone an implied warranty is typically created by law um acting from an Impulse of common sense so two really important implied warranties the first is the implied warranty of merchantability and I'll refer to it as the warranty of merch merchantability in most cases I leave out the implied part that's just kind of that's just the implied is implied I guess um and the implied warranty of merchantability basically says that unless excluded or modified a warranty that the goods should be merchantable is implied upon the contract of sale if the seller is a merchant of that their of goods in that kind basically what the implied warranty of merchant ability says is that goods are fit for their ordinary purposes if I for example buy a water bottle there is impli an implied warranty of merchantability that this will hold water or whatever beverage it is without leaks okay and that I can use it to drink from it does not imply that I can put gasoline in this um because this is not made for gasoline it's made for beverages I can't well I guess I could put sand in it I don't know uh but goods are fit for their ordinary purposes implied warranty of Fitness for a particular purpose is a little bit different let's say that I go into a vacuum cleaner store and um I am looking for a new vacuum cleaner and I say to the vacuum cleaner person vacuum cleaner sales person hi I'm looking for a vacuum cleaner and I'm looking for a vacuum cleaner that will um vacuum up the socks off my floor because I'm really not good at taking my socks off and putting them in the laundry basket I want a vacuum cleaner that does that will this vacuum cleaner do that and I hold up a vacuum cleaner if the vacuum cleaner salesperson says why yes that will pick up your socks no problem well they have just warrantied that particular vacuum cleaner for that particular per purpose picking up my socks okay and so with Fitness for a particular purp purpose the seller is somebody who is um who is involved in selling those types of goods and they are aware of the purpose that you are going to use the product for um Mo most often than not a smart seller is going to say when confronted with me asking about whether or not the vacuum cleaner will pick up my socks is H I don't know you could try that that and so they're not warrany it for that purpose and they're telling me it's on me to go and try it so that's Fitness for a particular purpose warranties can be excluded or disclaimed so the UCC permits sellers to exclude or disclaim warranties both in whole or in part an oral warranty can very easily be be disclaimed if I tell you something as I'm selling it to you and you are buying the product based on what I'm saying you're going to ask me to write it down because written warranties cannot be dis disclaimed if a salesperson or a business takes the time to write out a warranty and give it to a a buyer they can't later say well yes we wrote that down but we didn't mean it or we're excluding it okay the implied warranty of merchantability can be disclaimed by a seller so a seller can say we are disclaiming we we're going to sell you this water bottle but it's not made for water um but they have to do it in a way that it is conspicuous generally that conspicuousness includes the term merchantability okay um they have to use the word merchantability and many states prohibit Sellers from disclaiming implied warranties in the sale of consumer goods meaning that Walmart for example cannot disclaim the warranty of merchantability for my water bottle there are two ways that implied warranties can be disclaimed using um the first is using the term as is so when you see something for sale in Asis condition that is exactly what it means you're buying it with all faults okay which is why another term um to disclaim implied warranties is that term with all faults so consumer protections are both statutory in nature and once you purchase products you are protected by warranties unless they are disclaimed warranty protection comes from the uccc uh your Consumer Credit protections come from statutory law and that's it for this lecture