All credit repair organizations are governed, at the very least, by the Credit Repair Organizations Act (CROA). This law is enforced by the Federal Trade Commission (FTC). (Some states may have additional laws that credit organizations must abide by.) Under CROA there are several things credit repair organizations can and cannot do.
So how can you identify a credit repair scam or an organization that is not abiding by CROA?
- They counsel or advise you to lie or make any statement that is misleading.
- They counsel or advise you to make any statement with the intent to alter your identification (i.e. Create a Credit Privacy Number (CPN) or Employee Identification Number (EIN).
- They request payment in advance. Payment can only be requested after services have been rendered. (Some organizations may request payment for document processing – this practice is legal.)
- They fail to provide you with a written statement known as the ‘Consumer Credit File Rights Under State and Federal Law’.
- They do not provide you with a written contract and a notice of your right to cancel.
- They guarantee results or make use of any untrue or misleading representation of the services they provide.
In addition, please beware of any organization that indirectly or directly participates in falsely filing identity theft.
If any person or credit repair organization is found to violate CROA, you can report the person or organization to your state’s Attorney General, or file a complaint with the Federal Trade Commission, Consumer Financial Protection Bureau (CFPB), or the Better Business Bureau. Consult an attorney, you may have a right to sue.
To view the Credit Repair Organizations Act in its entirety, visit the Federal Trade Commission’s website at ftc.gov.
