Consumer credit protection laws in the U.S. and in Germany

Script from the year 2010 in the subject Law - Comparative Legal Systems, Comparative Law, grade: keine, University of Hamburg, course: Private Banking für Bachelor (6. Semester), language: English, abstract: Consumer Credit Protection Laws in the U.S. and in GermanyAmerican consumers¿indebtedness per capita is close to three times the German amount per capita. Predatory i. e. deceptive, abusive and unfair practices play a significantly more severe role in the U.S. than in Germany. The American law is designed to tackle social problems where they occur. As the old one, the new German Consumer Credit Law is by far less targeted and still lacks an effective enforcement. The German individual borrowing consumer in trouble is largely left alone. As a contrast, administrative enforcement and class actions are forceful weapons to protect and enforce the rights of the American consumer.The presentation explains and compares briefly the different approaches to consumer credit protection in the U.S. on federal level, in California as a prominent single state, and in Germany.The generically identical tool kit for consumer credit protection is employed very differently. Having become more and more realistic over the last four decades, the American law-makers and the authorities in charge of consumer credit protection reduced consumer information in favour of substantial provisions and effective administrative activities to briefly inform, warn, protect and, if appropriate, effectively support the weakest and the most endangered ones amongst the borrowing consumers.According to the EU¿s guidelines, the borrowing European consumer may experience an information overkill, starting summer 2010 when the new law will become effective. From the frustrating experiences with the first version of the Truth in Lending Act (1968) the American law-makers have concluded in 1980 that increasing the number and complexity of information is less helpful than providing for targeted and sanctioning substantive consumer protections. Will it take the EU and Germany also another 12 years to cut the flood of information which will confuse too many European consumers who want or even need to borrow money? The upcoming information overflow may also be attributed to the EU¿s aim to harmonize the EU financial market through standardized sets of consumer information.