New Credit Repair Rules Get Tough
Chris Gunn
NEW CREDIT REPAIR RULES GET TOUGH
Yesterday, a new federal law went into effect outlawing deceptive claims
made by credit repair organizations and giving consumers important new legal
rights.
"Every year, people fall prey to credit repair scams," said Jodie Bernstein,
Director of the FTC's Bureau of Consumer Protection. "The schemes often
target consumers who are unemployed, divorced, or have medical bills. These
con artists charge hundreds of dollars and claim they can 'fix' credit
reports so that accurate, timely information about the consumer's credit
history will no longer appear. These claims are false."
The new law is the first federal law targeting credit repair scams. It
covers both companies operating within one state and those engaged in
interstate commerce. The law applies regardless whether the credit repair
organization dealt with a consumer over the phone, through the mail, in
person or on the Internet. The most important new consumer rights under the
statute:
It prohibits all credit repair organizations from taking money from
consumers before services are fully performed.
It requires credit repair organizations to give consumers written
disclosure explaining their legal rights concerning their credit
histories, before any contracts are signed.
It requires credit repair organizations to give consumers written
contracts with all the terms and conditions of payment a detailed
description of the services to be provided, including any guarantees of
performance and an estimate of how long it will take to perform.
It gives consumers a three day cooling off period or right to cancel
any agreements they sign with a credit repair organization.
It states that any contract made between a consumer and a credit repair
organization that doesn't comply with the law is void.
The FTC has identified 47 credit repair companies operating on the Internet,
either by their websites or postings in the Usenet, and informed them of the
new law and how to comply. Similar warnings were also sent to over one
thousand credit repair organizations not on the Net.
The FTC has also released a new book, titled "Getting Back in the Black"
that explains how to get financially solvent legally, consumer's legal
rights, and the most common scams. The FTC has also launched a new <a
href="http://www.ftc.gov/ro/chro/index.htm"> credit repair consumer
education website.
For more information, check out the FTC press release.
<a href="http://www.ftc.gov/opa/9704/croa2.htm">
Log on the WebSite at http://www.fraud.org, or call 1-800-876-7060.
If you spot obviously illegal operations on the E-Ways, please
forward copies of the messages to NFIC at frau...@psinet.com.
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