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The Credit Repair Organizations Act

January 17th, 2012

The Federal Trade Commission warns consumers of the many “credit repair” scams being offered across the country by way of internet advertising, postcards, newspaper inserts, flyers, and even radio ads. Because of the pervasiveness of these many fraudulent companies, the Credit Repair Organizations Act was recently signed into law to protect consumers.

Some so-called credit repair organizations have a product to sell, a service in which they help a consumer identify and dispute false information on a credit report. However, this is something that any individual can do for himself or herself without cost. That being said, some may prefer the convenience of working with a third party to help get it done.

If you are considering working with a credit repair company, make sure that you understand your rights under the Credit Repair Organizations Act. You are, first of all, entitled to receive a copy of the “Consumer Credit File Rights under State and Federal Law” before you sign any contract.

Credit repair companies are not allowed to charge you until the promised services have been completed. They also cannot perform any of these services without your signature on a contract and a three-day waiting period, during which you have the right to cancel without any penalty. Finally, credit repair companies are not allowed to make any false claims about their services.

Examine the contract carefully and be sure it meets the following requirements:
1) The company’s name and address are clearly identified.

2) The services are described in detail.

3) Guarantees, if any, are in writing on the contract.

4) The time to perform the service is listed on the contract and

5) The terms and costs are also listed.

Following these steps and knowing consumer rights can prevent victimization by a fraudulent credit repair company.

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