California Credit Law Blog

A federal statute, 47 U.S.C. Section 415 (a), provides that the statute of limitations for civil actions to collect on unpaid telephone bills is two (2) years. Most state statute of limitations are much longer. California's statute is four (4) years for debts based on contracts. New York's law is six (6) years.

In an interesting decision, a trial court in Queens County, New York, recently held that the two year federal statute preempts state law. If the decision is upheld on appeal, a significant number of collection actions involving telephone bills will be subject to dismissal. The key factual question is whether more than two years have passed since there was any activity on the account.

Federal law requires the credit agencies to make everyone's credit reports available at no charge on a single website. The feds allowed the three major credit agencies to design the site. Predictably, the credit agencies designed the website, www.annualcreditreport.com, to confuse and entice consumers to buy credit scores and various credit protection products. Equally egregious, the three credit bureaus have capitalized on the free website by advertising "free" credit reports that are not really free.

Fortunately, the Credit Card Act of 2009 requires the FTC to issue new rules to stop these abuses. To implement the law, the FTC has proposed a new rule that to prohibit any advertising on the centralized website until AFTER the consumer obtains his or her free annual credit report.

The same new law requires that advertisements for “free credit reports” include prominent disclosures designed to prevent consumers from confusing these “free” offers with the federally mandated free annual credit report. The FTC rule will require any advertisement for "free" credit reports to prominently disclose that the advertised credit report is not the free credit report provided for by federal law. Such ads would also have to give the website address of the federally mandated free report website.