This statute, first signed by President Bill Clinton on September 30, 1996, ratifies into law legislation drafted to clean up a largely unregulated credit and financial service industry. They wanted to address the worst practices of some companies that made concrete promises (that they couldn’t deliver,) charge up-front fees (the same problem we saw with loan modification companies,) and little recourse for consumers to cancel their services if unhappy.
Weeding out deceptive advertising practices and ensuring compliance is at the root of the Credit Repair Organizations Act (CROA) but enforcing how credit companies can lawfully collect fees.
CROA intends to eliminate the practice of credit repair companies collecting up front fees, start up fees, service fees, and any other sums of money that are not warranted. Instead, the industry has moved to a model when clients pay only when credit repair services are performed. This is usually with a monthly fee or payment when pre-disclosed services are rendered. It also mandates that all agreements be clearly in writing for the client and gives consumers the right to cancel their agreement at any time, without penalty.
Of course if you’re looking for help with credit restoration, the folks at Blue Water Credit would love to earn your trust and compete for your business. But in the interest of the greater good, it’s important to educate the public so they can make informed and empowered decisions. For more information feel free to contact Blue Water Credit.
Summary of the Credit Repair Organizations Act
Act Pub. L. No. 104-208, § 2451, 110 Stat. 3009-455 (Sept. 30, 1996), amending title IV of the Consumer Credit Protection Act
(a) In general
No person may—
(1) make any statement, or counsel or advise any consumer to make any statement, which is untrue or misleading (or which, upon the exercise of reasonable care, should be known by the credit repair organization, officer, employee, agent, or other person to be untrue or misleading) with respect to any consumer’s credit worthiness, credit standing, or credit capacity to—
(A) any consumer reporting agency (as defined in section 1681a (f) of this title); or
(B) any person—
(i) who has extended credit to the consumer; or
(ii) to whom the consumer has applied or is applying for an extension of credit;
(2) make any statement, or counsel or advise any consumer to make any statement, the intended effect of which is to alter the consumer’s identification to prevent the display of the consumer’s credit record, history, or rating for the purpose of concealing adverse information that is accurate and not obsolete to—
(A) any consumer reporting agency;
(B) any person—
(i) who has extended credit to the consumer; or
(ii) to whom the consumer has applied or is applying for an extension of credit;
(3) make or use any untrue or misleading representation of the services of the credit repair organization; or
(4) engage, directly or indirectly, in any act, practice, or course of business that constitutes or results in the commission of, or an attempt to commit, a fraud or deception on any person in connection with the offer or sale of the services of the credit repair organization.
(b) Payment in advance
No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.
