The Credit Repair
Organizations Act ("CROA") is not actually an Act, it is actually
Title IV of The Consumer Credit Protection Act. Section 401 states, however, it
can be referred to as "CreditRepair Organizations Act".
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Now more than ever consumers must establish and maintain
strong credit worthiness and standing in order to obtain more credit. As a result many consumers who
have experienced credit problems seek assistance from credit repair organizations. Some credit repair organizations, however, advertise and engage in
unfair business practices which result in financial hardship for consumers,
particularly those of limited economic means or are uneducated.
The purposes of the Credit Repair Organizations Act is to ensure that prospective buyers 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 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. The statute was signed
by the President on September 30, 1996.
One of the more important areas covered by CROA is how credit repair organizations can get
paid. It is the general consensus that a creditrepair 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,
For more information, Visit Our own Website: Credit Repair
