The US Credit Repair Organizations Act ("CROA") is Title IV of the
Consumer Credit Protection Act. Despite its name, it is not actually an act; Section 401 states, however, it can be referred to as "Credit Repair Organizations Act". The statute was signed by President
Bill Clinton
William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and again ...
on September 30, 1996. The law was intended to prevent credit repair organizations from engaging in
unfair business practices
Unfair business practices encompass fraud, misrepresentation, and oppressive or unconscionable acts or practices by business, often against consumers, and are prohibited by law in many countries. In the European Union, each member state must re ...
which may result in financial hardship for consumers, particularly those of limited economic means or who are uneducated.
The purposes of the Credit Repair Organizations Act is to ensure that prospective buyers of credit repair services from credit repair organizations are provided with the information necessary to make an informed decision. It intends to protect the public from unfair or deceptive
advertising
Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
and business practices by credit repair organizations. It enumerates prohibited practices, required disclosures, contract requirements,
liability, and penalties for
non-compliance and procedure to report non-compliance.
One of the more important areas covered by CROA is how credit repair organizations can get paid. It is the general consensus that a credit repair company can only be paid after services have been rendered. This can be done using a monthly fee model where companies charge clients on a monthly basis after services are rendered or on the more modern pay after deletion model where clients only pay after items are deleted from the credit report. Companies that charge excess "setup" fees or all of their fees upfront violate the provisions of CROA.
[{{cite web , url=https://www.law.cornell.edu/uscode/text/15/1679b , title=15 U.S. Code § 1679b - Prohibited practices , publisher=Cornell University Law School , accessdate=18 March 2015]
References
External links
Credit Repair Organizations ActPDFdetails
as amended in the GPObr>Statute Compilations collection
United States federal financial legislation
Credit Repair Organizations