Compliance with Federal and State Regulations

Some states have state laws regulating credit repair organizations in addition to the federal laws. You should become familiar with the state laws for each state within which your credit repair organization operates and always know where your consumers reside to make sure you comply with the state laws of where your consumer is located in. If you solicit or service consumers outside the state where you reside, you must comply with federal laws in addition to state laws. You, and not CRC, will have sole responsibility to review your marketing and collection efforts relating to services you provide. Also you, and not CRC, must confirm that your marketing and receipt of fees are compliant with applicable state and federal laws.

Federal Law

There are both Federal and State laws that regulate the Credit Repair Industry. This section covers some of the applicable federal laws, such as the Credit Repair Organization Act and the Telemarketing Sales Rule. For more information, consult the Federal Trade Commission.

What Is the Credit Repair Organizations Act?

The Credit Repair Organization Act is title IV of the Consumer Credit Protection Act, which was signed into Law in 1996 by President Bill Clinton. It’s a federal law put in place to protect consumers from dishonest credit repair companies. The law’s intent is to prevent credit repair companies from taking advantage of consumers and help consumers make informed decisions when hiring a credit repair company.  

Credit Repair Organizations Act Prohibits 

• Lying or advising consumers to lie about their credit history. 
• Altering consumers identity, applying for a new EIN or creating a new identity or attempting to obtain false credit history.
• Misrepresenting the services they provide.  
• Asking consumers to pay for services before they have been provided.

Credit Repair Contract Requirements

Before a credit repair company can perform any services, they are required to provide a contract signed by the consumer and the contract must include the following:

• A disclosure called “Consumer Credit File Rights under State and Federal Law” that advises consumers of their rights.   
• A description of the services that will be performed to repair your credit. 
• An estimate of the time it will take to complete the services (or a date by which the services will be completed).
• A visible statement letting you know you can cancel the contract within 3 business days.
• Duplicate Notice of Cancellation forms.

Read the Full Credit Repair Organization Act

The TSR (Telemarketing Sales Rule)

You, and not CRC, will have sole responsibility to review your marketing and collection efforts relating to the services you provide. Also, you, and not CRC, must confirm that your marketing and receipt of fees are compliant with applicable state and federal laws.

If you solicit from or service customers outside of the state where you reside, you must comply with the Telemarketing Sales Rule (“TSR”). For more information, regarding the TSR you can visit the FTC’s website: https://www.ftc.gov/business-guidance/resources/complying-telemarketing-sales-rule. CRC’s statements are not legal advice. You should seek legal advice to ensure compliance.

Credit Repair Cloud requires that all customers comply with the TSR and any other applicable laws and regulations to continue using its software.

State Laws

Every state has different rules, regulations and requirements. If you are providing services to consumers in your home state, where your business is based, you must follow the law for your state. If you are providing services to any consumers in other states, you must also follow the laws for the states your clients live in. For those of you that are just getting started in the credit repair business, there is no need to worry about states other than your own - there are plenty of consumers that need your help in your home state; however, if you decide to branch out into other states, please remember that the rules apply to the state the consumer resides. So in other words, you must follow the law for the state the consumer lives in. In addition, remember that any time you are servicing out-of-state consumers, you must adhere to federal laws in addition to state laws.

Credit Repair Laws in California

Are there state laws for credit repair in California?

Yes, under the Credit Services Act of 1984.

What are the specific statutes? 

Civ. Code §§ 1789.10 et seq.

Who is the authority for credit repair in California?

California Department of Justice Attorney General's Office: https://oag.ca.gov/

Laws often change, so make sure you do your own research and do not rely on this information to be 100% accurate.