FTC FACTSfor Consumers

CREDIT

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FEDERAL TRADE COMMISSION FOR THE CONSUMER

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f all the many different types of credit ó for example, retail

credit, loans, charge cards, and mortgages ó utility credit may

be the one that most people cannot do without. Utility credit is

the credit extended to users of gas, electricity, and water services. Phone

service also can be considered a utility.

Having an account with a utility provider is a lot like having any other

credit account: You get service now and pay for it later. And, like other creditors, utility companies keep a record of your payment patterns. This record

becomes your utility credit history. Itís important to have a good utility credit

history because it becomes part of your entire credit history, which often is a

determining factor in your ability to get credit ó including utility services ó

and sometimes even a job, in the future.

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Utility Credit
Facts for Consumers

To ensure fairness, federal law prohibits utility

and other companies from engaging in

discriminatory practices. Specifically, under the

Equal Credit Opportunity Act (ECOA), these

companies cannot discriminate against

consumers on the basis of sex, marital status,

race, national origin, religion, or age. They

also cannot discriminate against people who

receive public assistance.

Hereís a look at how the law works when it

comes to utility services:

Deposits

Utility companies frequently require new

customers to make a deposit or get a letter of

guarantee from a person who agrees to pay the

bill if the customer does not. Under the law,

requiring only some customers to pay a deposit

or get a letter of guarantee is offering them

credit on less favorable terms. If done on a

discriminatory basis, it is illegal.

The utility company generally can require you

to make a deposit or obtain a letter of guarantee

if you are a new customer and all new

customers are required to pay a deposit, or if

you have a bad utility credit history.

The utility company cannot require you to pay

a deposit because any previous utility services

you received were under your spouseís name

and not yours. If you can show that you had

utility service in a spouseís name, the utility

company must consider the utility credit history

yours. If you share your spouseís utility credit

history, it could be unlawful for the utility

company to require you ó but not your spouse

ó to pay a deposit.

Determining Your Credit History

What if your spouse had a bad utility credit

history? Could that reflect on you? In some

circumstances, it could.

If your spouseís credit history is bad, the utility

company could consider that credit history

yours and ask you to pay a deposit or get a

letter of guarantee. However, the ECOA gives

consumers the opportunity to prove that their

spouseís bad credit history does not reflect their

own unwillingness or inability to pay.

For example, if you were seeking utility

services in your own name but your bad credit

history reflects your former spouseís credit

practices, not yours, the utility company would

have to consider any evidence you provide that

you were not part of your former spouseís bad

credit practices. That might include information

demonstrating that you did not live with the

spouse when the account was overdue, that you

never saw the bills, or that you paid the bills

once you discovered they were overdue.

However, your spouseís utility credit history

can be considered yours if your spouse lived

with you or you benefited from using the

account. If you live in a community property

state, the utility company can consider any

information about your spouse that it can

consider about you when determining your

credit history ó even if you were not living

together and did not share the account while it

was open. To learn whether you live in a

community property state, check with your

state consumer protection agency.

If you cannot convince the utility company that

the bad credit history is not yours, you may

have to pay a deposit or get a letter of

guarantee. Or, you may be asked to pay your

spouseís old debts before your service is

connected. In the latter case, the companyís

right to take such action is governed by state

law, not the ECOA. Contact your city or

county consumer protection office for more

information.
Facts for Consumers

Get It In Writing

If you are denied utility credit (or any credit) or

offered less favorable credit terms than you

applied for and you reject the offer, you have

the right to know the reasons for the companyís

action. If your application is denied, or if you

reject the companyís offer of less favorable

terms, the company must send you a notice

stating either the specific reasons for the action

or stating your right to get the reasons within

30 days (if you make your request within 60

days of the companyís notice to you). Always

put your request in writing.

Learning the reason may help you become

more creditworthy, correct errors, or detect

unlawful discrimination.

For More Information

The Federal Trade Commission (FTC) works

for the consumer to prevent fraudulent,

deceptive, and unfair business practices in the

marketplace and to provide information to help

consumers spot, stop, and avoid them. To file a

complaint or to get free information on

consumer issues, visit www.ftc.gov or call tollfree, 1-877-FTC-HELP (1-877-382-4357);

TTY: 1-866-653-4261. The FTC enters

Internet, telemarketing, identity theft, and other

fraud-related complaints into Consumer

Sentinel, a secure online database available to

hundreds of civil and criminal law enforcement

agencies in the U.S. and abroad.
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

Facts for Consumers

March 2004