Credit Repair Organizations Act

Sec. 405.  Disclosures.

(a)          Disclosure Required.—Any credit repair organization shall provide any consumer with the following written statement before any contract or agreement between the consumer and the credit repair organization is executed:

 

Consumer Credit File Rights Under State and Federal Law

You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly.  However, neither you nor any “credit repair” company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report.  The credit bureau must remove accurate, negative information from your report only if it is over 7 years old.  Bankruptcy information can be reported for 10 years.

 

You have a right to obtain a copy of your credit report from a credit bureau.  You may be charged a reasonable fee.  There is no fee, however, if you have been turned down for credit, employment, insurance, or a rental dwelling because of information in your credit report within the preceding 60 days.  The credit bureau must provide someone to help you interpret the information in your credit file.  You are entitled to receive a free copy of your credit report if you are unemployed and intend to apply for employment in the next 60 days, if you are a recipient of public welfare assistance, or if you have reason to believe that there is inaccurate information in your credit report due to fraud.

 

You have a right to sue a credit repair organization that violates the Credit Repair Organization Acct.  This law prohibits deceptive practices by credit repair organizations.

 

You have the right to cancel your contract with any credit repair organization for any reason within 3 business days from the date you signed it.

 

Credit bureaus are required to follow reasonable procedures to ensure that the information they report is accurate.  However, mistakes may occur.

 

You may, on your own, notify a credit bureau in writing that you dispute the accuracy of information in your credit file.  The credit bureau must then reinvestigate and modify or remove inaccurate or incomplete information.  The credit bureau may not charge any fee for this service.  Any pertinent information and copies of all documents you have concerning an error should be given to the credit bureau.

 

If the credit bureau’s reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit bureau, to be kept in your file, explaining why you think the record is inaccurate.  The credit bureau must include a summary of your statement about disputed information with any report it issues about you.

 

The Federal Trade Commission regulates credit bureaus and credit repair organizations.  For more information contact:

 

The Public Reference Branch

Federal Trade Commission

Washington, DC  20580

 

(b)        Separate Statement Requirement.—The written statement required under this section shall be provided as a document which is separate from any written contract or other agreement between the credit repair organization and the consumer or any other written material provided to the consumer.

 

(c)        Retention of Compliance Records.—

 

(1)          In general.—The credit repair organization shall maintain a copy of the statement signed by the consumer acknowledging receipt of the statement.

(2)          Maintenance for 2 years.—The copy of any consumer’s statement shall be maintained in the organization’s files for 2 years after the date on which the statement is signed by the consumer.

 

Section 406.  Credit Repair Organizations Contracts.

 

(a)          Written Contracts Required.—No services may be provided by any credit repair organization for any consumer—

 

(1)          Unless a written and dated contract (for the purchase of such services) which meets the requirements of subsection (b) has been signed by the consumer; or

(2)          Before the end of the 3-business-day period beginning on the date the contract is signed.

 

(b)          Terms and Conditions of Contract.—No contract referred to in subsection (a) meets the requirements of this subsection unless such contract includes (in writing)—

(1)          The terms and conditions of payment, including the total amount of all payments to be made by the consumer to the credit repair organization or to any other person;

(2)          A full and detailed description of the services to be performed by the credit repair organization for the consumer, including—

(A)          All guarantees of performance; and

(B)          An estimate of—

(i)            The date by which the performance of the services (to be performed by the credit repair organization or any other person) will be complete; or

(ii)           The length of the period necessary to perform such services;

(3)          The credit repair organization’s name and principal business address; and

(4)          A conspicuous statement in bold face type, in immediate proximity to the space reserved for the consumer’s signature on the contract, which reads as follows:  ‘You may cancel this contract without penalty or obligation at any time before midnight of the 3rdd business day after the date on which you signed the contract.  See the attached notice of cancellation form for an explanation of this right.’

Sec. 407.  Right to Cancel Contract.

(a)          In General.—Amy consumer may cancel any contract with any credit repair organization without penalty or obligation by notifying the credit repair organization of the consumer’s intention to o dos at any time before midnight of the 3rd business day which begins after the date on which the contract or agreement between the consumer and the credit repair organization is executed or would, but for this subsection, become enforceable against the parties.

(b)          Cancellation Form and Other Information.—Each contract shall be accompanied by a form, in duplicate, which has the heading ‘Notice of Cancellation’ and contains in bold face type the following statement:

You may cancel this contract, without any penalty or obligation, at any time before midnight of the 3rd day which begins after the date the contract is signed by you.

To cancel this contract, mail or deliver a signed, dated copy of this cancellation notice, or any other written notice to (name of credit repair organization) at (address of credit repair organization) before midnight on (date)

I hereby cancel this transaction,

(date)

(purchaser’s signature)

(c)          Consumer Copy of Contract Required.—Any consumer who enters into any contract with any credit repair organization shall be given, by the organization—

(1)          A copy of the completed contract and the disclosure statement required under Section 405; and

(2)          A copy of any other documents the credit repair organization required the consumer to sign, at the time the contract or the other document is signed.