Office of the Dean of Students          
  Office of the Dean of Students -> Legal Services for Students -> Student Information Guide -> Consumer Law

Consumer Law

Buying and Selling a Car

What should I do first?

If you still like the car, you may:

DO NOT:

Note: Seller may tell you by law he has a certain number of days to deliver the title. While this may be true in certain instances, it is best not to give up the money without the title.

How should I close the deal?

What if I am the seller?

Is it okay to buy from a Dealer?

back to top

Illegal Downloading, File Sharing, & Copyright Violations (The RIAA and others)

In the past several years, there has been a huge increase in lawsuits and legal activity by various trade associations to protect their copyrights on sound recordings, movies, software and the like. The most aggressive of these associations is the Recording Industry Association of American (RIAA) which represents companies such as Sony, Capitol, Time Warner and others. The Motion Picture Association of America (MPAA) has also been increasingly tough on those who illegal download films. These groups tend to focus on college students they allege have illegally copied music and video files through the internet without payment or permission from the holder of the copyright.

If a person produces a musical or other creative work and secures a legal protection called a copyright for it, no one can use, copy, sell or profit from that work without the written permission of the copyright holder. Normally, this consent is accomplished by the purchase of a CD or DVD of the item, which then includes the right to listen to or view the item as often as desired. Permission may also be acquired through the use of iTunes or any such similar device where a sum is paid and permission to download the item is included in the transaction. The RIAA takes the position that having the file loaded on a file sharing "P2P" or bit-torrent program, whether or not you intend to distribute or share the song/video with anyone else, also violates the copyright act. A violation carries a civil, i.e. monetary, damage amount of $750.00 per recording in the event of a successful lawsuit. Such activity is also prohibited by UT Austin's internal rules of conduct, and the event is reported to Student Judicial Services for possible disciplinary action.

The RIAA, MPAA, and other organizations identify students they allege are illegally downloading or sharing by legally searching filesharing programs online by song, movie, or other work title. Once the person had been identified by their IP address*, then a pre-lawsuit settlement letter is sent by one of these groups (often through UT Austin's ITS department) to the students they believe are violators, normally giving the individual 20 days to respond to their demand by calling their settlement hotline. If the student used the university as an Internet service provider, including occasional use through WiFi while on campus, then they would potentially be at risk. These letters offer to accept a fixed amount, usually $3,000 to $4,600 to settle the alleged infringement before a suit is actually filed.

Students who use filesharing and/or download are at substantial risk of being sued, or at least paying a hefty sum for the practice. You are cautioned not to copy files, and not to use P2P programs or bit-torrent programs for music and video files. This caution applies even if you have purchased the item, because the copyright owners believe sharing it online is just as much a violation as downloading. If you are contacted and do nothing, you may well end up with a Federal court judgment against you for several tens of thousands of dollars, which can follow you and your credit for life.

LSS strongly urges that if you receive a settlement letter by email or postal service, or a subpoena indicating that you have been sued in Federal Court that you DO NOT call the settlement hotline but that YOU DO immediately seek legal advice from either our office or another attorney. A lawyer still may be able to contact the organization and settle the case quickly, possibly protect your identity from being known by the organization, identify if possibly you have a legal defense to the allegations, and work out a payment plan that may give you up to a year to pay the proposed fine, among other things.

* Some students have noticed that the current IP address was not the same as the one targeted by the RIAA, but that is no consolation as the UT Austin IP addresses rotate frequently and the address that you currently hold is very unlikely to be the same one noted during an alleged violation months previously

back to top

Sales

Door to Door Sales

How long do I have to cancel a purchase made via a door to door sale?

A Federal Trade Commission rule gives a buyer three days in which s/he may cancel a sale that:

If I wish to cancel the sale, what do I do?

If you decide to cancel the sale, you should contact the seller within three days of the purchase-follow up an oral notice with a written notice-and allow the seller to come pick up the product. It must be in substantially the same condition as when you received it. If the seller fails to pick up the item within twenty days of cancellation, you may keep it without any further obligations unless other arrangements have been made.

Within ten days of receipt of the notice of cancellation, the seller must return any payments and trade-in merchandise and release the buyer from any further obligations.

Telephone Sales

Helpful Hints:

Mail Order Sales

What can I do to minimize risk of loss when ordering by mail?

Are there other remedies available to me?

Yes. A dissatisfied buyer can file a complaint with the Postal Inspector through the Postal Authorities. Also, the Federal Trade Commission has regulations concerning delivery delays and refunds. Companies are required to:

Unsolicited Goods

If I receive unrequested items in the mail, what are my options?

You have two remedies:

Email Marketing (aka, "Spam")

Texas has recently instituted a new anti-spam statute which provides that unsolicited commercial email may not be sent unless "ADV:" is used as the first four characters in the subject line of the message or, in the case of a message containing obscene and/or sexual material, "ADV: ADULT ENTERTAINMENT must be in the subject line. Violation of these laws may subject a spammer to both civil and criminal penalties. You can report illegal spam to the Attorney General's office. In addition, if you are the victim of a violation of these anti-spam laws, you may sue the spammer for actual damages or the lesser of 1) $10.00 for each unlawful message; or 2) $25,000.00 for each day the unlawful message is received.

back to top

Credit

Credit Cards

What laws protect consumers when they are using credit cards?

A consumer using credit cards is protected by the Federal Consumer Protection Act, which includes the Truth-in-Lending Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011 also contains provisions designed to regulate credit card companies.

Can an issuer of a credit card give a consumer an unsolicited credit card?

No.

What am I liable for if my credit card is stolen?

A consumer is protected from unauthorized use of her/his card. S/he is liable for a maximum of $50 if the card is stolen, and then only if the unauthorized use occurs before the consumer notifies the issuer of the theft/loss.

However, if you determine who has stolen your credit card, be aware that if you make a "deal" for the thief to pay you back, and then that person defaults on the agreement, the police may be unwilling to file criminal fraud charges. Further, the credit card companies may not credit your account with the disputed or improperly charged amount. The result could be that your only recourse will be to file a civil suit against the perpetrator while you remain legally responsible for the debt. In this instance, your only hope to recoup your loss is that the defendant has sufficient funds to pay any judgment you might win (something that is not at all a guarantee).

Debit Cards

Debit cards are issued by banks and may be used to withdraw funds from an Automated Teller Machine (ATM, not Texas A & M) or to make purchases from stores or vendors who accept major credit cards. Debit cards are riskier than credit cards because the identity of the person using the "credit" card fraudulently is not verified by a personal identification number (PIN), so funds may be completely withdrawn from a bank account without a consumer knowing his/her money is gone. Unlike a credit card, a consumer does not have the option of withholding payment on charges which they suspect are the result of theft, fraud, or error, nor is liability limited to $50. Once the consumer's money is gone, it may take a while for the bank to investigate and credit the bank account. In the meantime, the consumer can be left with little or no funds.

What is credit card abuse?

It is illegal for another person merely to possess your credit card without your consent if there is the intent to use it. Violation of this law is a state jail felony.

To protect yourself against illegal activity on your card(s):

Helpful hints to prevent theft:

Collection Agencies

What should I do if I am behind in paying a bill?

If you are having trouble paying a bill, contact the creditor before the account becomes delinquent. The creditor may be willing to accept smaller payments, at least on a temporary basis.

If my debt is turned over to a collection agency, what can they legally do to try to get me to pay?

There are two laws that protect a consumer from bill collectors-the Federal Fair Debt Collection Practices Act and the Texas Debt Collection Act. A debt collector/creditor cannot:

How can I stop a collection agency from contacting me?

Write a letter telling them to stop. Send the letter by certified mail, return receipt requested and keep a copy of the letter. Upon receipt of the letter, the collector or creditor cannot contact you any further except to say that they will not contact you again or inform you of a specific action, such as the filing of a lawsuit against you.

What can I get out of them if they do this to me?

You can potentially recover your actual damages, statutory damages, and attorney's fees.

Credit Reporting Errors

What laws protect a person from inaccurate credit reporting?

The Fair Credit Reporting Act covers consumers by requiring credit bureaus to furnish correct and complete information to businesses. This law is enforced by the Federal Trade Commission.

Can I get a copy of my credit report?

You have the right to know what your credit report says. You may obtain your report annually for free by visiting www.annualcreditreport.com. You may also obtain a copy of the report directly from Credit Reporting Agencies (CRA). (Check the Yellow Pages under "credit" or "credit rating and reporting"). There is a fee unless you have been denied credit within thirty days of your request.

What if I find an error on my credit report?

Request that the CRA investigate the error. If the investigation does not resolve your dispute, send a written explanation of the disputed information (two hundred words or less) and request that the CRA show your version to the potential creditor who has requested your credit history. There may be a charge unless you request this service within thirty days after you receive notice of denial of a credit application.

How long will a bad debt be reflected by the agency?

CRA's will report unfavorable information for seven years, with certain exceptions, such as bankruptcy data, which will be maintained for ten years, and information regarding a judgment will last until the judgment is no longer valid.

How else may I challenge the validity of a debt?

You may request that the CRA verify the debt with the creditor. If they do not confirm the debt within 30 days (45 days if the dispute originates from www.annualcreditreport.com) of receipt of notice, then the debt will be eliminated from your credit report.

Helpful Hint: Keep copies of all notices/requests you send and mail them by certified mail, return receipt requested.

Credit Billing Errors

How do I protest an incorrect bill?

Under the Fair Credit Reporting Act you must send the creditor written notice about the problem to avoid paying for any disputed charges. To be protected under this law:

What is the creditor required to do?

Identity Theft

What is identity theft?

Identity theft occurs when someone uses another person's personal information (name, social security number, date of birth, etc.) without permission to commit fraud or other crimes. The most common types of identity theft are:

How might my identity be stolen?

There are numerous methods. Some of the most common are:

How do I avoid identity theft?

Use common sense.

What should I do if I am a victim of identity theft?

I received an e-mail from a Nigerian prince offering to send me a money order in the amount of $10,000,000.00. Should I drop out of school and retire?

E-mails like these are known as advance fee fraud. They take many forms (e.g., "you've won the lottery," "we want you to be a mystery shopper," "I want to buy your car for more than you're asking," "you have inherited a substantial sum of money"). Most of the time, the scammer sends the victim a fake money order with instructions to deposit it in the victim's bank account; the victim is then told to wire a portion of the payment back to the scammer via Western Union. By the time the victim realizes the money order is fake, the scammer is long gone and the victim's bank is now demanding to be compensated for the deficiency in the victim's account. If it seems too good to be true, it probably is.

Bankruptcy

What is bankruptcy?

During a college career, many students incur a large amount of debt-from student loans, car purchases, landlords, and credit cards. Often when they fall behind, students consider filing bankruptcy to avoid payment of these debts. Bankruptcy is a step of last resort in most cases, and should only be used for emergency or extreme hardship. The ultimate goal of bankruptcy is a discharge, which is a permanent court order against collection of the debt by the creditor, and a chance for the debtor (the person filing bankruptcy) to start over financially. The two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13.

In a Chapter 7 the debtor lists all debts and property, shows inability to repay, and designates which property can be kept. Some debts, such as most taxes, child support, and alimony cannot be discharged. Student loans can only be discharged if extreme hardship is proven-such as a disabling illness.

In a Chapter 13 the debtor proposes a three to five year payback plan based on the excess of monthly income over basic monthly living expenses. This payment plan can be used to restructure payments while keeping most property, including a house, appliances, or car which might otherwise be repossessed.

NOTE: The new law also makes it more difficult to stop a Landlord's eviction if it had begun before filing.

In both, a Debtor must have filed his most recent tax returns. There are also stronger eligibility requirements for child support payments.

Whether you can file a Chapter 7 or 13 is determined in large part due to recent changes in the law, by reference to National income standards first, and then a Means Test for allowed expenses, based on IRS national and regional amounts. One compares his or her monthly income to the national standards; if it is at or below the amount, then you qualify for Chapter 7. If it is above, then all of a person's expenses are put into a rather involved formula, which then decides based on the law's guidelines, whether you have the ability to repay part of the debts. If the formula says you do, then you can ONLY file a Chapter 13. There are a few hardship exceptions, but they are very narrow. If you file a Chapter 7 and the formula and the court find you shouldn't have, the case can be dismissed and you and/or your attorney may have to pay a fine.

All bankruptcies now require credit counseling before filing, and require budget counseling before the discharge is granted. The new laws make this relief more expensive than before, and in some instances a debtor may not be able to keep the property they could under the previous statute.

How often can I declare bankruptcy?

Once every eight years.

How long does a bankruptcy stay on my credit report?

Ten years.

When should I file bankruptcy?

Generally, filing should occur when there is no realistic expectation of repayment, or when the Internal Revenue Service or another creditor is about to seize a person's assets.

It should be examined very carefully, and taken generally when there is no other option.

If I file bankruptcy, can I keep any property?

In bankruptcy, unless the creditor loaned the money to buy the item or the IRS is a creditor, ordinarily the debtor keeps exempt property. Exempt property cannot be taken to satisfy debts. There are two sources of exempt property-state law and the Bankruptcy Code. A debtor must choose between either the state or federal exemptions.

Texas exemptions include 10 acres in town or 200 acres in the country of real estate, as well as $30,000.00 for a single person or $60,000.00 for a married couple in personal property (such as furniture, clothing, car, books, tools of the trade, pictures, and food.) In addition, except for child support or income taxes, wages cannot be garnished, that is, taken directly from one's employer. However, in some instances the type and amount of property one can keep is determined by how long you have lived in the state in which you want to file, the purpose for which you borrowed money against the property in the past, and the means test formulas.

The Bankruptcy Code also offers a set of exemptions, with smaller monetary amounts in the categories than the Texas exemptions but can include cash, which is generally not included in the Texas exemptions. In addition, properly IRS qualified retirement accounts are exempt-subject to an overall cap of one million dollars for Individual Retirement Accounts.

Why should I not file bankruptcy?

What are some alternatives to filing bankruptcy?

Many companies will allow lower payments if pressed, and the amount of the debt which seems insurmountable now may be relatively minor after securing that first "real" job. If one secures a reduced payment agreement from a creditor, make sure the terms are in writing.

Also Consumer Credit Counseling is available in some cases. Consumer Credit counseling is a nonprofit agency acting as a mediator between the debtor and creditors, and can, if funds are available, negotiate a long-term payment plan. The debtor pays a certain amount each pay period to Consumer Credit, which then distributes it pro rata to each creditor. We strongly recommend that consumers contact Consumer Credit before considering bankruptcy.

What is likely to happen if I decide not to file bankruptcy?

What if a creditor sues me?

If a creditor files a lawsuit and wins, he gets a judgment against the debtor. The creditor then has to collect the debt. However, if a debtor does not have any non-exempt property (see the above question "What property can a debtor keep?"), then the creditor normally cannot take any of the debtor's property at that time. The judgment can also be put on the debtor's credit history. Also the judgment sometimes remains "active" forever, earning interest continually, allowing the creditor to periodically attempt collection.

back to top

THE Deceptive Trade Practices Act (DTPA)

What is the DTPA?

This act protects Texas consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty. The DTPA eliminates many barriers to the enforcement of a consumer's rights. If a consumer prevails in court, s/he can recover her/his attorney's fees.

What can I recover if I win a case under this law?

A consumer may collect actual and punitive damages. However, to collect punitive damages, it is necessary to show that the seller breached the law intentionally, a standard that may be difficult to prove in court. Without the proof of "intent," the consumer's remedies are usually limited to recovery of "economic damages," court costs and attorney's fees only, but punitive damages may be up to three times the amount of your actual damages.

Are there any prerequisites before I can file a lawsuit under this law?

Yes. To assert a claim under the DTPA, at least sixty days before filing a lawsuit, a consumer must give written notice to the person or business against whom the complaint is being made. The notice must include:

The merchant then has sixty days in which to pay the amount demanded by the consumer or make a written settlement offer. An offer is considered rejected if the consumer fails to accept it within thirty days. If a consumer rejects an offer, the dispute can then go to trial.

back to top