Consumer Rights

Once you reach 18. A credit card account is a form of a contract. You cannot enter into a legal contract until you reach 18, so you’ll need to wait till then.  If you start receiving credit card application offers in the mail, review these carefully, and have another adult you trust review them with you. Talk to your social worker about “unfreezing” your credit when you are ready to apply for a credit card, or other loan.

Interest rates on credit cards can vary, and may be “fixed” (i.e. the interest rate is always the same) or “variable” (i.e. the interest rate changes based on changes in the economy).  Even credit cards with fixed interest rates may increase the rate significantly if you make a late payment. Some credit cards, especially those for younger people without credit, may charge fees. These fees can add up. Try to find a credit card without a fee.

The credit card application will ask for your income, and the credit card company will get and review a copy of your credit report, if you have one.  You will have a credit report if you have ever applied for a credit card, a personal loan, or insurance. The credit report will contain information about where you live, how you pay your bills, and whether you have (as an adult) ever been sued, arrested, or filed for bankruptcy.

You have the right to receive a free copy of your credit report annually. Each of the three nationwide consumer reporting agencies must give you a free copy of your credit report once every twelve months (www.annualcreditreport.com).  This is important because some people who have bad credit steal the names and social security numbers of young people in order to fool companies and get credit. This can damage your own credit. Learn more: https://www.consumerfinance.gov/about-us/blog/how-to-protect-vulnerable-children-from-identity-theft/

▪   While in care, your social worker or Independent Living coordinator should assist you to check your credit report and get it fixed if it is incorrect or someone has fraudulently used your name. Order a free copy of your report at www.annualcreditreport.com, or 1-877-322-8228. You will need to provide your name, address, Social Security number and birthdate.

Before you do business with a company you know little about, check the company out with the local Better Business Bureau in the company’s location.  To find the Better Business Bureau office you need, go to http://lookup.bbb.org.

▪   Never give your credit card number, bank account information or Social Security number out over the telephone unless you’re familiar with the company and know why the information is necessary. Never share passwords with anyone.

There are special rules for sales of used cars by car dealers or companies. Dealers and companies must post a “Buyer’s Guide” on the used cars they sell. The Buyer’s Guide must contain certain information, including the terms and condition of any warranty and whether the car is being sold “As Is.”  However, if you buy a used car from an individual, these rules do not apply. Before buying a used car, know your rights: http://www.valegalaid.org/issues/consumer/buying-a-used-car

A car sold “As Is” comes with no warranties. This means that if something about the car does not work properly, the dealer you bought the car from is NOT responsible for fixing it.  In Virginia, when dealers sell a car “As Is,” they must provide a statement about the “As Is” sale on the front of the buyer’s order.

» In an “As Is” sale, if you do not get the “As Is” statement on the front of your buyer’s order, and did not get a Buyer’s Guide, you have thirty days to cancel the sale.  If you cancel the sale under these conditions, you may return the car and get back most of the payments you made.

If you do not get the “As Is” statement on the front of your buyer’s order, or the Buyer’s Guide, the dealer has given you an “implied warranty.” This is an unspoken, unwritten promise that the car will do what it is supposed to do. (This is called “warranty of merchantability,” or a “warranty of fitness for a particular purpose,” meaning you bought it based on the seller’s word that it will work for its ordinary purpose). You may also get a written warranty, which may be limited (the dealer will cover some of the costs of repairs for a limited number of miles or period of time) or a full warranty (the dealer will repair the car for free).

Private sellers don’t have to use the Buyer’s Guide.  Most private sales do not come with any warranties, but are “As Is.” Watch out for scams, especially on sites like Craigslist. Ask to take the car to a mechanic to check before purchasing. Do not pay in cash; ask to see the car’s title before paying. Check online sites such as Kelly’s BlueBook (KBB.com, or CarFax.com) to find out whether the car you are considering buying is a good deal.

You can either pay in full when you buy the car or you can finance your purchase of the car over time (called an auto loan).  If you get a loan, the total cost of the car increases because you are also paying for the cost of credit. This includes interest and other loan costs.  Be sure you read, understand and agree with everything on all the loan papers before you sign anything.  If you do finance the purchase of a car instead of paying in full up front, shop around for the best interest rate.  Generally, banks and credit unions offer lower interest rates than car dealers, so look for the best deal.

You cannot enter into a legally enforceable contract until you turn 18. A contract is an agreement between two or more persons, or between persons and companies, to do a particular thing. When you sign a contract, it means you read it, understood it and agreed with it.  If you want to change a contract, you must ask if you can make the change or changes before you sign.  Do not rely on the explanation of the seller (or whoever the other party to the contract is) about what the contract means.  Have someone you trust look over a contract before you sign it.

• Never sign a contract with un-filled blank spaces.
• Don’t assume you know the meaning of legal terms. Ask!
• Never depend on an oral promise.  Always ask for things to be put into writing and signed.
• Always get a signed copy of the contract and save it.
• Always get a signed and dated receipt for any payment you make, and save it. Take a photo of it in case you lose it.

When someone co-signs a contract, it means that person, in addition to the borrower, is agreeing to be responsible for paying the money owed under the contract.  In fact, the creditor can even try to collect the money from the co-signer without trying to get the money from the borrower first.  Creditors ask a borrower to get a co-signer, or “guarantor,” when the borrower may not have enough income, or a well-established credit history.  If you have not had your job long, or do not make a certain amount of money, the creditor may require you to get someone to co-sign.  This may be a family member or other adult with a good credit history.

Once you sign a contract, it is valid and enforceable right away. Usually, there is no right to cancel.  Two exceptions to this are:  a contract that is signed as the result of a door-to-door sale, and a home mortgage not used to buy a house (i.e. a second mortgage).  These contracts must include a statement telling you about your right to cancel within 3 business days and a “notice of cancellation” form which you can use to cancel the contract. A contract may be cancelled in the case of fraud or coercion.

These are small, short term, high-interest-rate loans.  These loans go by many names:  payday loans, cash advance loans, check advance loans, post-dated check loans, car title loan, or deferred deposit check loans.  When you get a payday loan, you write a personal check to the lender for the amount you are borrowing, plus a fee.  The lender gives you the amount of the check minus the fee and holds your check until your next payday.  Learn more: https://www.scc.virginia.gov/bfi/files/pay_guide.pdf

» Payday lending is expensive. Although the lender’s fee is no more than $15-$30 for each $100 you borrow, for a two-week loan the rate of interest is 390% per year.  For a one-week loan, the interest rate is 780% per year.  This is up to eighty times higher than the interest rates charged by credit cards, banks, and other lenders. For alternatives: http://www.virginiafairloans.org/resources/alternatives/

When you don’t pay your bills or debts you owe, your debt may be turned over to a debt collector. It is illegal for debt collectors to threaten or harass you in their attempts to collect money you owe. https://www.consumerfinance.gov/ask-cfpb/what-is-harassment-by-a-debt-collector-en-336/

▪   If your debt is “secured” (i.e., there is collateral—or some  valuable property—that the person loaning the money would be entitled to take from you, such as a car, or house), you could end up losing things you’ve worked hard to get. Learn more  here:  http://www.valegalaid.org/issues/debtors-rights/fair-debt-collection

Pay your most important expenses first: your rent or mortgage, current utilities, food, medical care, transportation, insurance and other ongoing monthly expenses Your least important expenses are your credit cards, old medical bills, old utility bills and other unsecured debts.

▪   Make a plan for how you will pay off your debts. You may contact creditors (people to whom you owe money) and ask for extra time to pay, or for a payment plan. https://www.consumer.gov/section/managing-your-money