Uniform Consumer Credit Code (UCCC)

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Uniform Consumer Credit Code (UCCC)

The Uniform Consumer Credit Code (UCCC) is a model statute developed to standardize and regulate consumer credit transactions. Drafted by the Uniform Law Commission, the UCCC provides states with a framework to protect borrowers from predatory lending and unfair credit practices.

Purpose and scope

  • Establishes uniform rules for consumer credit products, from credit cards to installment loans and mortgages.
  • Aims to prevent fraud, usury (excessive interest rates), and unconscionable contract terms.
  • Encourages fair competition among lenders to help lower consumer interest rates.

Legal status and adoption

  • The UCCC is a model law, not a federal statute. States may adopt it in whole or in part.
  • Originally approved in 1968 and revised in 1974.
  • Adopted in entirety by 11 states: Colorado, Idaho, Indiana, Iowa, Kansas, Maine, Oklahoma, South Carolina, Utah, Wisconsin, and Wyoming. Other states have incorporated portions of it into their own laws.

Key provisions

  • Interest-rate limits: Sets ceilings and guidelines on interest rates charged to consumers; exact limits vary by credit type and state adoption.
  • Anti-usury protections: Prevents lenders from charging unreasonably high rates and fees.
  • Fair contract requirements:
  • Prohibits waiver-of-defense clauses that strip borrowers of legal defenses in disputes.
  • Bars unconscionable transactions—contracts so one-sided they may be unenforceable (for example, deceptive representations or blanket warranty disclaimers).
  • Borrower remedies: Preserves consumer defenses against lenders and provides mechanisms to challenge unfair practices.
  • Liability rules for card issuers: Includes provisions holding issuing banks accountable for certain claims a cardholder may have against merchants.

Relationship with federal law

  • The UCCC operates alongside federal statutes; where federal law applies, it may supersede or overlap with UCCC provisions:
  • Truth in Lending Act (TILA): Governs disclosure of loan terms; many UCCC disclosure rules are incorporated into or replaced by TILA.
  • Fair Debt Collection Practices Act (FDCPA): Regulates debt collection practices, including protections against abusive collection methods.
  • Credit CARD Act of 2009: Amended TILA to strengthen disclosure and limit certain credit card fees and practices.

Development and governance

  • Drafted by the Uniform Law Commission (ULC), a body of appointed commissioners who prepare uniform laws to promote legal consistency among states.
  • Commissioners are appointed by each jurisdiction (often by governors) and serve without pay; appointment methods and terms vary by state.
  • Distinction: A uniform law (model code) is drafted by the ULC and intended for state enactment; a model act can be drafted by various organizations and generally serves as guidance rather than an authoritative uniform proposal.

Notable exemptions and evolution

  • Some modern financial arrangements, such as certain income-share agreements (ISAs), have not historically fallen under the UCCC, reflecting how novel products can outpace model-code coverage.
  • Over time, federal regulation and state-specific adaptations have modified how the UCCC’s principles are applied.

Key takeaways

  • The UCCC is a model consumer-credit law designed to protect borrowers and promote fair lending.
  • It is not federal law; states choose whether to adopt its provisions.
  • Many protections the UCCC promoted now coexist with or have been incorporated into federal statutes like TILA, FDCPA, and the CARD Act.
  • The Uniform Law Commission continues to draft uniform acts to help states achieve consistent legal frameworks across jurisdictions.